Exam 36: Investor Protection, insider Trading, and Corporate Governance

Trail Bike Corporation is a public company whose shares are traded in the public securities markets. Under the Securities Act of 1933,Trail Bike is required to

To raise $120 million to expand operations,Premiere Movies Corporation makes a stock offering directly to sixty accredited investors and twenty sophisticated,but unaccredited investors. Premiere Movies plans to notify the SEC of sales. Under the Securities Act of 1933,this issue may qualify as an "exempt" transaction

Insider trading occurs when persons buy or sell securities on the basis of information that is not available to the pubic.

The Securities Exchange Act of 1934 applies to companies that have assets in excess of $5 million and five hundred or more employees.

Drilling Tools,Inc.,wants to make an initial public offering of securities. Drilling Tools believes that it qualifies for an exemption under Regulation A from the full registration requirement of the federal Securities Act of 1933. -Drilling Tools decides to sell its new securities via the Internet. This offering

State corporation statues set up the legal framework for corporate governance.

Fleet Delivery Corporation is a public company with a market capitalization of less than $75 million. Fleet is poised to issue securities in a transaction that,under the Securities Act of 1933,is "exempt." This enables Fleet to

For civil sanctions to be imposed under Section 10(b)of the Securities Exchange Act of 1934 and SEC Rule 10b-5,scienter must not exist.

Exemptions from federal securities law are not exemptions from state laws.

Corporate "outsiders" may not be held liable for insider trading under Section 10(b)of the Securities Exchange Act of 1934 and SEC Rule 10b-5.

Rico does not work for Street Bikes Company,but wrongfully obtains inside information concerning the firm. Based on the information,Rico buys and sells Street Bikes stock for personal gain. The Securities and Exchange Commission prosecutes Rico,arguing that he is liable because he stole information rightfully belonging to another. This argument is

Rollo is the chief executive officer of Specialty Magazines,Inc.,which is required to file certain financial reports with the Securities and Exchange Commission (SEC). Under the Sarbanes-Oxley Act of 2002,Rollo must

Hawaiian Shirts,Inc.,wants to issue stock of $4 million in a single offering. The corporation must provide disclosure documents that generally are the same as those used in registered offerings to

Karin,an officer for Liquified Natural Gas Corporation (LNG),buys 10,000 shares of LNG stock. One week later,LNG announces that it will merge with a competitor,Mining & Piping Company,and the price of LNG stock increases. One month later,Karin sells her shares for a profit. Under Section 16(b)of the Securities Exchange Act of 1934,Karin would not be liable if,after buying the stock,she had waited

Dhani,an accountant for Eureka! Inc. learns of undisclosed company plans to market a new laptop. Dhani buys 1,000 shares of Eureka! stock. He reveals the company plans to Fay,who tells Geoff. Both Fay and Geoff buy 100 shares. Geoff knows that Fay got her information from Dhani. When Eureka! publicly announces its new laptop,Dhani,Fay,and Geoff sell their stock for a profit. -Under the Securities Exchange Act of 1934,Fay is most likely

Shoes & Sox Corporation is a public company whose shares are traded in the public securities markets. With respect to financial and other significant information concerning its securities,the Securities Act of 1933

Drilling Tools,Inc.,wants to make an initial public offering of securities. Drilling Tools believes that it qualifies for an exemption under Regulation A from the full registration requirement of the federal Securities Act of 1933. -If Drilling Tools is exempt from the federal registration requirement,Drilling Tools is

Cattle Ranch Company offers its stock for sale only in a single state. The law in Cattle Ranch's state is like the law in most states. Cattle Ranch's offer is subject to state securities statutes that include

Under the Sarbanes-Oxley Act of 2002,chief executive officers no longer need to certify the accuracy of information in corporate financial statements.

"Forward-looking" financial forecasts that turn out to be wrong are not protected against liability for securities fraud.