Question 1

State securities laws apply mainly to interstatetransactions.

Accepted Answer

A) True 
 B)False  False

Question 2

Fact Pattern 30-2
​Eddie, an accountant for Fresh Dairy, Inc., learns of undisclosed company plans to market a new smooth-tasting, fat-free butter. Eddie buys 10,000 shares of Fresh Dairy stock. He reveals the company plans to Giselle, who buys 5,000 shares. Giselle tells Hong, who tells Irwin, each of whom buy 1,000 shares. They know that Giselle got her information from Eddie. When Fresh Dairy publicly announces its new product, Eddie, Giselle, Hong, and Irwin sell their stock for a profit.
-Refer to Fact Pattern 30-2. Under the Securities Exchange Act of 1934, Giselle is most likely

Accepted Answer

A)  ​liable for insider trading. 
B)  ​not liable because Giselle did not prevent others from profiting. 
C)  ​not liable because Giselle did not solicit information from Eddie. 
D)  ​not liable because Giselle does not work for Fresh Dairy. 
A)  ​liable for insider trading. 
B)  ​not liable because Giselle did not prevent others from profiting. 
C)  ​not liable because Giselle did not solicit information from Eddie. 
D)  ​not liable because Giselle does not work for Fresh Dairy. A

Question 3

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​

Accepted Answer

A)  ​contribute to the operations of national stock exchanges. 
B)  ​disclose financial and other information about its securities. 
C)  ​engage in market surveillance to deter undesirable practices. 
D)  ​all of the choices. 
A)  ​contribute to the operations of national stock exchanges. 
B)  ​disclose financial and other information about its securities. 
C)  ​engage in market surveillance to deter undesirable practices. 
D)  ​all of the choices. B

Question 4

Section 10(b) of the Securities Exchange Act of 1934 and SEC Rule 10b-5 apply just to corporate "insiders."​

Accepted Answer

A) True 
 B)False

Question 5

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

Accepted Answer

A) True 
 B)False

Question 6

Securities can be sold after the effective date of the registration statement without restrictions.

Accepted Answer

A) True 
 B)False

Question 7

Social Media Sites Corporation is required to file a registration statement with the Securities and Exchange Commission. This statement must contain

Accepted Answer

A) a copy of prospectuses to be provided to investors. 
B) a description of securities being offered for sale. 
C) a record of pre-registration sales in securities. 
D) all of the choices. 
A) a copy of prospectuses to be provided to investors. 
B) a description of securities being offered for sale. 
C) a record of pre-registration sales in securities. 
D) all of the choices.

Question 8

The Securities and Exchange Commission does not regulate the content of proxy statements.

Accepted Answer

A) True 
 B)False

Question 9

Private parties may sue violators of Section 10(b) and Rule 10b-5.

Accepted Answer

A) True 
 B)False

Question 10

Accredited investors include banks, but not investment companies.

Accepted Answer

A) True 
 B)False

Question 11

Orbital Flights, Inc., is required to register its securities under Section 12 of the Securities Exchange Act of 1934. Section 16(b) of the act covers

Accepted Answer

A)  ​the declaration of dividends by Orbital's board of directors. 
B)  ​the later re-registration of Orbital's securities. 
C)  ​the short-swing activities of Orbital's insiders. 
D)  ​the solicitation of proxies from Orbital's shareholders. 
A)  ​the declaration of dividends by Orbital's board of directors. 
B)  ​the later re-registration of Orbital's securities. 
C)  ​the short-swing activities of Orbital's insiders. 
D)  ​the solicitation of proxies from Orbital's shareholders.

Question 12

The Securities Exchange Act of 1934 is a one-time disclosure law.

Accepted Answer

A) True 
 B)False

Question 13

Global Resources Corporation, and its officers, directors, and shareholders, buy and sell securities. Section 10(b) of the Securities Exchange Act of 1934 applies to the purchase or sale of a security​

Accepted Answer

A)  only by an investment company. 
B)  ​only involving short-swing profits. 
C)  ​only involving a tipper and tippee. 
D)  ​in almost any circumstances. 
A)  only by an investment company. 
B)  ​only involving short-swing profits. 
C)  ​only involving a tipper and tippee. 
D)  ​in almost any circumstances.

Question 14

Household Products Corporation wants to make an offering of securities to the public. This offering is not exempt from registration under the Securities Act of 1933. Before Household Products sells its securities, it must provide investors with​

Accepted Answer

A)  ​a forward-looking financial forecast. 
B)  ​an investment contract. 
C)  ​a prospectus. 
D)  ​samples of its products. 
A)  ​a forward-looking financial forecast. 
B)  ​an investment contract. 
C)  ​a prospectus. 
D)  ​samples of its products.

Question 15

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​

Accepted Answer

A)  ​reduce the compliance costs by not requiring an auditor report. 
B)  buy and sell the securities without liability for "recaptures."​ 
C)  ​make forward-looking financial forecasts without liability. 
D)  ​withhold inside information from accredited investors. 
A)  ​reduce the compliance costs by not requiring an auditor report. 
B)  buy and sell the securities without liability for "recaptures."​ 
C)  ​make forward-looking financial forecasts without liability. 
D)  ​withhold inside information from accredited investors.

Question 16

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​

Accepted Answer

A)  ​antifraud and disclosure provisions. 
B)  ​antifraud provisions only. 
C)  ​disclosure provisions only. 
D)  ​neither antifraud nor disclosure provisions. 
A)  ​antifraud and disclosure provisions. 
B)  ​antifraud provisions only. 
C)  ​disclosure provisions only. 
D)  ​neither antifraud nor disclosure provisions.

Question 17

Liability can be imposed on those who are negligent in not discovering fraud in connection with a registration statement or prospectus.

Accepted Answer

A) True 
 B)False

Question 18

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

Accepted Answer

A)  ​certify that the reports are complete and accurate. 
B)  ​designate a corporate official to assume liability for inaccuracies. 
C)  ​do nothing. 
D)  ​read the reports and be prepared to answer questions about them. 
A)  ​certify that the reports are complete and accurate. 
B)  ​designate a corporate official to assume liability for inaccuracies. 
C)  ​do nothing. 
D)  ​read the reports and be prepared to answer questions about them.

Question 19

Under the Sarbanes-Oxley Act of 2002, chief financial officers must certify the accuracy of information in corporate financial statements and reports that are filed with the Securities and Exchange Commission.

Accepted Answer

A) True 
 B)False

Question 20

Fact Pattern 30-1
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.
-Refer to Fact Pattern 30-1. If Drilling Tools is exempt from the federal registration requirement, Drilling Tools is

Accepted Answer

A)  ​automatically exempt from any state registration requirement. 
B)  ​not subject to any state securities laws. 
C)  ​not necessarily exempt under a state registration requirement. 
D)  ​automatically subject to all state registration requirements. 
A)  ​automatically exempt from any state registration requirement. 
B)  ​not subject to any state securities laws. 
C)  ​not necessarily exempt under a state registration requirement. 
D)  ​automatically subject to all state registration requirements.

Exam 30: Investor Protection, Insider Trading, and Corporate Governance

State securities laws apply mainly to interstatetransactions.

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​

Section 10(b) of the Securities Exchange Act of 1934 and SEC Rule 10b-5 apply just to corporate "insiders."​

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

Securities can be sold after the effective date of the registration statement without restrictions.

Social Media Sites Corporation is required to file a registration statement with the Securities and Exchange Commission. This statement must contain

The Securities and Exchange Commission does not regulate the content of proxy statements.

Private parties may sue violators of Section 10(b) and Rule 10b-5.

Accredited investors include banks, but not investment companies.

Orbital Flights, Inc., is required to register its securities under Section 12 of the Securities Exchange Act of 1934. Section 16(b) of the act covers

The Securities Exchange Act of 1934 is a one-time disclosure law.

Global Resources Corporation, and its officers, directors, and shareholders, buy and sell securities. Section 10(b) of the Securities Exchange Act of 1934 applies to the purchase or sale of a security​

Household Products Corporation wants to make an offering of securities to the public. This offering is not exempt from registration under the Securities Act of 1933. Before Household Products sells its securities, it must provide investors with​

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​

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​

Liability can be imposed on those who are negligent in not discovering fraud in connection with a registration statement or prospectus.

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

Under the Sarbanes-Oxley Act of 2002, chief financial officers must certify the accuracy of information in corporate financial statements and reports that are filed with the Securities and Exchange Commission.

The Legal Environment

Constitutional Law

Courts and Alternative Dispute Resolution

Tort Law

Product Liability

Intellectual Property Rights

Internet Law, Social Media, and Privacy

Criminal Law and Cyber Crime

Business Ethics

Nature and Classification

Agreement

Consideration, Capacity, and Legality

Defenses to Contract Enforceability

Third Party Rights and Discharge

Breach and Remedies

International Law in a Global Economy

The Formation of Sales and Lease Contracts

Performance and Breach of Sales and Lease Contracts

Negotiable Instruments

Banking in the Digital Age

Security Interests and Creditors Rights

Bankruptcy

Agency Relationships in Business

Employment, Immigration, and Labor Law

Employment Discrimination

Sole Proprietorships and Private Franchises

All Forms of Partnership

Limited Liability Companies and Special Business Forms

Corporations

Antitrust Law and Promoting Competition

Consumer and Environmental Law

Liability of Accountants and Other Professionals

Personal Property and Bailments

Real Property and Landlord-Tenant Law

Insurance, Wills, and Trusts

Filters

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

Section 10(b) of the Securities Exchange Act of 1934 and SEC Rule 10b-5 apply just to corporate "insiders."

Global Resources Corporation, and its officers, directors, and shareholders, buy and sell securities. Section 10(b) of the Securities Exchange Act of 1934 applies to the purchase or sale of a security

Household Products Corporation wants to make an offering of securities to the public. This offering is not exempt from registration under the Securities Act of 1933. Before Household Products sells its securities, it must provide investors with

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

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