Question 1

Registration of securities calls for disclosure of which of the following?

Accepted Answer

A) A description of the registrant's properties and business. 
B) A description of the significant provisions of the security to be offered for sale and its relationship to the registrant's other capital securities. 
C) Information about the management of the registrant. 
D) Financial statements certified by independent public accountants. 
E) All of the above. 
A) A description of the registrant's properties and business. 
B) A description of the significant provisions of the security to be offered for sale and its relationship to the registrant's other capital securities. 
C) Information about the management of the registrant. 
D) Financial statements certified by independent public accountants. 
E) All of the above.

Question 2

The Private Securities Litigation Reform Act sought to prevent abuses in private securities fraud lawsuits.

Accepted Answer

A) True 
 B)False

Question 3

Rule 10b-5 applies to:

Accepted Answer

A) only a buyer of a registered security. 
B) only a seller of a registered security. 
C) any person who buys or sells only a registered security. 
D) any person who buys or sells any security. 
A) only a buyer of a registered security. 
B) only a seller of a registered security. 
C) any person who buys or sells only a registered security. 
D) any person who buys or sells any security.

Question 4

Most states require the registration of securities and regulate brokers and dealers.

Accepted Answer

A) True 
 B)False

Question 5

The Securities Act of 1933 identifies a number of securities exemptions that are, in effect, transaction exemptions.

Accepted Answer

A) True 
 B)False

Question 6

Section 14(e) of the Securities Act of 1934 makes it unlawful for any person to:

Accepted Answer

A) make any untrue statement of material fact in connection with any tender offer, even if the target company is not subject to the 1934 Act's reporting requirements. 
B) omit to state any material fact in connection with a tender offer. 
C) engage in any fraudulent, deceptive, or manipulative practices in connection with any tender offer. 
D) All of the above. 
A) make any untrue statement of material fact in connection with any tender offer, even if the target company is not subject to the 1934 Act's reporting requirements. 
B) omit to state any material fact in connection with a tender offer. 
C) engage in any fraudulent, deceptive, or manipulative practices in connection with any tender offer. 
D) All of the above.

Question 7

The 1933 Securities Act defines the term "security." The courts have generally interpreted the statutory definition to include non-traditional forms of investments.The Supreme Court of the United States has adopted a two-tier analysis of what constitutes a security.Within this analysis the Court has used a three-part test to determine whether a non-traditional financial transaction constitutes an investment contract and thus a security.Explain (a) the 1933 Act's statutory definition of security, (b) the courts' general interpretation of the 1933 Act's definition and (c) the Supreme Court's two-tier test.Use case law to illustrate your explanation, if appropriate.Also, why do you think the Supreme Court had to devise such an analysis?

Accepted Answer

(a)
Any note, stock, bond, debenture, ev

Question 8

All of the following are exempt from registration under the 1933 Act EXCEPT:

Accepted Answer

A) government bonds. 
B) securities issued by medical facilities. 
C) drafts issued for working capital. 
D) state-regulated insurance company annuities. 
A) government bonds. 
B) securities issued by medical facilities. 
C) drafts issued for working capital. 
D) state-regulated insurance company annuities.

Question 9

The civil penalty for a person who trades on inside information:

Accepted Answer

A) is payable into the U.S.Treasury. 
B) may be three times the profit gained or loss avoided as a result of the unlawful purchase or sale. 
C) is, for a controlling person, up to the greater of $1,425,000 or three times the profit gained or loss avoided as a result of the controlled person's violation. 
D) All of the above. 
A) is payable into the U.S.Treasury. 
B) may be three times the profit gained or loss avoided as a result of the unlawful purchase or sale. 
C) is, for a controlling person, up to the greater of $1,425,000 or three times the profit gained or loss avoided as a result of the controlled person's violation. 
D) All of the above.

Question 10

Insiders would violate the short-swing profits rule (16b) of the 1934 Act by buying stock on January 1 and selling on May 1.

Accepted Answer

A) True 
 B)False

Question 11

The provisions of Section 17(a) of the 1933 Act:

Accepted Answer

A) primarily allows for a private right of action for persons injured by the act. 
B) make it unlawful to engage in any transaction, practice, or course of business that operates as deceit upon the issuer. 
C) make it unlawful in the offer or sale of any securities to obtain property by any statement that omits a material fact without which the information is misleading. 
D) None of the above. 
A) primarily allows for a private right of action for persons injured by the act. 
B) make it unlawful to engage in any transaction, practice, or course of business that operates as deceit upon the issuer. 
C) make it unlawful in the offer or sale of any securities to obtain property by any statement that omits a material fact without which the information is misleading. 
D) None of the above.

Question 12

Recovery of damages under Rule 10b-5 requires proof of:

Accepted Answer

A) reliance on a misstatement or omission. 
B) materiality. 
C) scienter. 
D) connection with the purchase or sale of a security. 
E) All of the above. 
A) reliance on a misstatement or omission. 
B) materiality. 
C) scienter. 
D) connection with the purchase or sale of a security. 
E) All of the above.

Question 13

If Terry makes a tender offer to the owners of Pizza Village's registered stock, he must file a statement with the SEC if:

Accepted Answer

A) he owns 1% of Pizza Village stock. 
B) he will, after the acquisition, own 5% of all Pizza Village stock. 
C) he will, after the acquisition, own 5% of one class of Pizza Village stock. 
D) he will own more than half the stock in all classes. 
A) he owns 1% of Pizza Village stock. 
B) he will, after the acquisition, own 5% of all Pizza Village stock. 
C) he will, after the acquisition, own 5% of one class of Pizza Village stock. 
D) he will own more than half the stock in all classes.

Question 14

"Shelf registrations" have to do with delayed sales of stock.

Accepted Answer

A) True 
 B)False

Question 15

The 1995 Private Securities Litigation Reform Act grants authority to the SEC to bring civil actions against aiders and abettors for certain violations of the 1934 Act.

Accepted Answer

A) True 
 B)False

Question 16

Accredited investors include only institutions, such as banks and investment companies, not individuals.

Accepted Answer

A) True 
 B)False

Question 17

A defense to an action based on untrue statements contained in a registration statement is:

Accepted Answer

A) innocent mistake. 
B) due diligence. 
C) constructive disclosure. 
D) reasonable diligence. 
A) innocent mistake. 
B) due diligence. 
C) constructive disclosure. 
D) reasonable diligence.

Question 18

The Securities and Exchange Commission is an independent, judicial agency which administers state and federal securities laws.

Accepted Answer

A) True 
 B)False

Question 19

Insiders may refrain from trading on inside information rather than disclose it to avoid liability under Rule 10b-5.

Accepted Answer

A) True 
 B)False

Question 20

The Securities Act of 1933 regulates tender offers and proxy solicitations.

Accepted Answer

A) True 
 B)False

Exam 40: Securities Regulation

Registration of securities calls for disclosure of which of the following?

The Private Securities Litigation Reform Act sought to prevent abuses in private securities fraud lawsuits.

Rule 10b-5 applies to:

Most states require the registration of securities and regulate brokers and dealers.

The Securities Act of 1933 identifies a number of securities exemptions that are, in effect, transaction exemptions.

Section 14(e) of the Securities Act of 1934 makes it unlawful for any person to:

All of the following are exempt from registration under the 1933 Act EXCEPT:

The civil penalty for a person who trades on inside information:

Insiders would violate the short-swing profits rule (16b) of the 1934 Act by buying stock on January 1 and selling on May 1.

The provisions of Section 17(a) of the 1933 Act:

Recovery of damages under Rule 10b-5 requires proof of:

If Terry makes a tender offer to the owners of Pizza Village's registered stock, he must file a statement with the SEC if:

"Shelf registrations" have to do with delayed sales of stock.

The 1995 Private Securities Litigation Reform Act grants authority to the SEC to bring civil actions against aiders and abettors for certain violations of the 1934 Act.

Accredited investors include only institutions, such as banks and investment companies, not individuals.

A defense to an action based on untrue statements contained in a registration statement is:

The Securities and Exchange Commission is an independent, judicial agency which administers state and federal securities laws.

Insiders may refrain from trading on inside information rather than disclose it to avoid liability under Rule 10b-5.

The Securities Act of 1933 regulates tender offers and proxy solicitations.

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

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