Question 1

SEC regulations concerning fraud in securities transactions apply to:

Accepted Answer

A) all securities transactions involving interstate commerce. 
B) only securities registered under the 1934 Act. 
C) only securities registered under the 1933 Act. 
D) securities registered under both the 1933 and 1934 Acts. 
A) all securities transactions involving interstate commerce. 
B) only securities registered under the 1934 Act. 
C) only securities registered under the 1933 Act. 
D) securities registered under both the 1933 and 1934 Acts. A

Question 2

A registration statement becomes public immediately on filing with the SEC, but a prospectus only becomes public upon signature of the chief financial officer.

Accepted Answer

A) True 
 B)False  False

Question 3

Marge wishes to raise some money to begin mass producing her prize-winning jellies and jams.She offers her neighbors a portion of her profits if they will put up $2,000 each towards her endeavor.Is their investment a "security"?

Accepted Answer

A) Yes, since Marge will do all the work. 
B) Yes, because her neighbors will have a security interest in the jelly. 
C) No, since the neighbors are putting no effort into it. 
D) No, because Marge is not issuing stock certificates. 
A) Yes, since Marge will do all the work. 
B) Yes, because her neighbors will have a security interest in the jelly. 
C) No, since the neighbors are putting no effort into it. 
D) No, because Marge is not issuing stock certificates. A

Question 4

A "private placement" involves no public offering and is exempt from registration.

Accepted Answer

A) True 
 B)False

Question 5

Under the SEC's 2005 revisions regarding written communications:

Accepted Answer

A) all issuers may use a free-writing prospectus after the filing of the registration statement. 
B) communications by issuers more than 30 days before filing a registration statement are allowed as long as they reference a securities offering that is the subject of a registration statement. 
C) well-known seasoned issuers may engage at any time only in written communications other than a free-writing prospectus. 
D) unseasoned issuers may not publish forward-looking information. 
A) all issuers may use a free-writing prospectus after the filing of the registration statement. 
B) communications by issuers more than 30 days before filing a registration statement are allowed as long as they reference a securities offering that is the subject of a registration statement. 
C) well-known seasoned issuers may engage at any time only in written communications other than a free-writing prospectus. 
D) unseasoned issuers may not publish forward-looking information.

Question 6

The SEC may not advance the effective date of a registration statement.

Accepted Answer

A) True 
 B)False

Question 7

"Restricted securities" are exempted from registration.

Accepted Answer

A) True 
 B)False

Question 8

For purposes of Section 16(b) of the 1934 Securities Exchange Act, which of the following are not "insiders"?

Accepted Answer

A) Shareholders owning more than 10 percent of the stock of a corporation listed on a national stock exchange or registered with the SEC. 
B) Directors. 
C) Officers. 
D) All of the above may be considered insiders. 
A) Shareholders owning more than 10 percent of the stock of a corporation listed on a national stock exchange or registered with the SEC. 
B) Directors. 
C) Officers. 
D) All of the above may be considered insiders.

Question 9

The Securities Act of 1933 is also called the "Truth in Securities Act."

Accepted Answer

A) True 
 B)False

Question 10

If a lawyer were being held liable for a misstatement in a registration statement, her defense(s) would be:

Accepted Answer

A) she was only following directions. 
B) she had reasonable grounds to believe and did believe her information was true. 
C) she was not responsible for the portion that contained the misstatement. 
D) All of the above. 
E) Both (b) and (c) above are correct. 
A) she was only following directions. 
B) she had reasonable grounds to believe and did believe her information was true. 
C) she was not responsible for the portion that contained the misstatement. 
D) All of the above. 
E) Both (b) and (c) above are correct.

Question 11

Which of the following would ordinarily NOT be considered a security under the federal securities laws?

Accepted Answer

A) Bonds. 
B) Stocks. 
C) Investment contracts. 
D) An investment in a nonprofit venture based on one's own entrepreneurial efforts.. 
A) Bonds. 
B) Stocks. 
C) Investment contracts. 
D) An investment in a nonprofit venture based on one's own entrepreneurial efforts..

Question 12

The Securities Enforcement Remedies and Penny Stock Reform Act of 1990 granted the SEC power to:

Accepted Answer

A) issue cease-and-desist orders. 
B) impose civil penalties up to $1,250,000. 
C) bring civil actions for specified violations of the 1934 Act against aiders and abettors. 
D) All of the above. 
A) issue cease-and-desist orders. 
B) impose civil penalties up to $1,250,000. 
C) bring civil actions for specified violations of the 1934 Act against aiders and abettors. 
D) All of the above.

Question 13

If a company has assets of over $10 million but trades its stock over the counter, it is nevertheless required to comply with the 1934 Act if it has:

Accepted Answer

A) 500 or more shareholders. 
B) one class of stock with 500 or more shareholders. 
C) 500 or more shares of stock outstanding. 
D) 500 different investors. 
A) 500 or more shareholders. 
B) one class of stock with 500 or more shareholders. 
C) 500 or more shares of stock outstanding. 
D) 500 different investors.

Question 14

The Sarbanes-Oxley Act:

Accepted Answer

A) allows the SEC to add criminal penalties to a disgorgement fund for the benefit of victims of violations of the 1933 and 1934 securities acts. 
B) requires an outside CPA and the corporate treasurer to certify the financial and other information contained in the issuer's annual and quarterly reports. 
C) requires that issuers of securities disclose in plain English to the public on a rapid and current basis such additional information concerning material changes in the financial condition or operations of the issuer as the SEC determines is necessary or useful. 
D) All of the above. 
A) allows the SEC to add criminal penalties to a disgorgement fund for the benefit of victims of violations of the 1933 and 1934 securities acts. 
B) requires an outside CPA and the corporate treasurer to certify the financial and other information contained in the issuer's annual and quarterly reports. 
C) requires that issuers of securities disclose in plain English to the public on a rapid and current basis such additional information concerning material changes in the financial condition or operations of the issuer as the SEC determines is necessary or useful. 
D) All of the above.

Question 15

The due diligence defense generally requires the defendant to show that he had reasonable grounds to believe and did believe that there were no untrue statements or material omissions in a registration statement.

Accepted Answer

A) True 
 B)False

Question 16

Prohibited bribery can result in fines and imprisonment under the antibribery provision of :

Accepted Answer

A) the Private Securities Litigation Reform Act. 
B) the Foreign Corrupt Practices Act. 
C) the Securities and Exchange Commission. 
D) None of the above. 
A) the Private Securities Litigation Reform Act. 
B) the Foreign Corrupt Practices Act. 
C) the Securities and Exchange Commission. 
D) None of the above.

Question 17

The antifraud provisions of the 1933 Act pertain to both unregistered and registered securities.

Accepted Answer

A) True 
 B)False

Question 18

Willful violations of the Securities Act of 1933 are subject to a fine of not more than __________ and/or imprisonment of not more than __________ or both.

Accepted Answer

A) $5,000, one year. 
B) $10,000, five years. 
C) $100,000, five years. 
D) $250,000, ten years. 
A) $5,000, one year. 
B) $10,000, five years. 
C) $100,000, five years. 
D) $250,000, ten years.

Question 19

The 1933 Securities Act differs from the 1934 Act in that the former deals with issuing stock and the latter has to do with trading stock that has already been issued.

Accepted Answer

A) True 
 B)False

Question 20

Only civil liability may be imposed for violations of the Securities Act of 1933.

Accepted Answer

A) True 
 B)False

Exam 40: Securities Regulation

SEC regulations concerning fraud in securities transactions apply to:

A registration statement becomes public immediately on filing with the SEC, but a prospectus only becomes public upon signature of the chief financial officer.

Marge wishes to raise some money to begin mass producing her prize-winning jellies and jams.She offers her neighbors a portion of her profits if they will put up $2,000 each towards her endeavor.Is their investment a "security"?

A "private placement" involves no public offering and is exempt from registration.

Under the SEC's 2005 revisions regarding written communications:

The SEC may not advance the effective date of a registration statement.

"Restricted securities" are exempted from registration.

For purposes of Section 16(b) of the 1934 Securities Exchange Act, which of the following are not "insiders"?

The Securities Act of 1933 is also called the "Truth in Securities Act."

If a lawyer were being held liable for a misstatement in a registration statement, her defense(s) would be:

Which of the following would ordinarily NOT be considered a security under the federal securities laws?

The Securities Enforcement Remedies and Penny Stock Reform Act of 1990 granted the SEC power to:

If a company has assets of over $10 million but trades its stock over the counter, it is nevertheless required to comply with the 1934 Act if it has:

The Sarbanes-Oxley Act:

The due diligence defense generally requires the defendant to show that he had reasonable grounds to believe and did believe that there were no untrue statements or material omissions in a registration statement.

Prohibited bribery can result in fines and imprisonment under the antibribery provision of :

The antifraud provisions of the 1933 Act pertain to both unregistered and registered securities.

Willful violations of the Securities Act of 1933 are subject to a fine of not more than __________ and/or imprisonment of not more than __________ or both.

The 1933 Securities Act differs from the 1934 Act in that the former deals with issuing stock and the latter has to do with trading stock that has already been issued.

Only civil liability may be imposed for violations of the Securities Act of 1933.

Introduction to Law

Business Ethics

Civil Dispute Resolution

Constitutional Law

Administrative Law

Criminal Law

Intentional Torts

Negligence and Strict Liability

Introduction to Contracts

Mutual Assent

Conduct Invalidating Assent

Consideration

Illegal Bargains

Contractual Capacity

Contracts in Writing

Third Parties to Contracts

Performance, Breach, and Discharge

Contract Remedies

Introduction to Sales and Leases

Performance

Transfer of Title and Risk of Loss

Product Liability: Warranties and Strict Liability

Sales Remedies

Form and Content

Transfer

Holder in Due Course

Liability of Parties

Bank Deposits, Collections, and Funds Transfers

Relationship of Principal and Agent

Relationship With Third Parties

Formation and Internal Relations of General Partnerships

Operation and Dissolution of General Partnerships

Limited Partnerships and Limited Liability Companies

Nature and Formation of Corporations

Financial Structure of Corporations

Management Structure of Corporations

Fundamental Changes of Corporations

Secured Transactions and Suretyship

Bankruptcy

Intellectual Property

Employment Law

Antitrust

Accountants Legal Liability

Consumer Protection

Environmental Law

International Business Law

Introduction to Property, Property Insurance, Bailments, and Documents of Title

Interests in Real Property

Transfer and Control of Real Property

Trusts and Wills

Filters

Willful violations of the Securities Act of 1933 are subject to a fine of not more than and/or imprisonment of not more than or both.