Question 1

The antifraud provisions of the 1934 Act would prohibit which of the following?

Accepted Answer

A) Lying about the value of the firm's assets to sell stock. 
B) Disclosing that the firm has discovered oil on its property in order to sell stock. 
C) Telling about the bad health of the CEO in a transaction to purchase stock. 
D) Not disclosing the salaries of secretaries of a large firm whose stock is being sold. 
A) Lying about the value of the firm's assets to sell stock. 
B) Disclosing that the firm has discovered oil on its property in order to sell stock. 
C) Telling about the bad health of the CEO in a transaction to purchase stock. 
D) Not disclosing the salaries of secretaries of a large firm whose stock is being sold.

Question 2

Solicitation includes any request:

Accepted Answer

A) for a proxy. 
B) not to execute a proxy. 
C) to revoke a proxy. 
D) All of the above. 
A) for a proxy. 
B) not to execute a proxy. 
C) to revoke a proxy. 
D) All of the above.

Question 3

Securities sold under Regulation A must be registered if they are resold.

Accepted Answer

A) True 
 B)False

Question 4

The SEC's 2005 revisions greatly restrict the rules regarding written communications before and during registered securities offerings.

Accepted Answer

A) True 
 B)False

Question 5

The Securities Act of 1934 imposes significant disclosure requirements upon reporting companies.

Accepted Answer

A) True 
 B)False

Question 6

The rule that prohibits schemes and devices to defraud investors is Rule:

Accepted Answer

A) 504 
B) 14(a)-(e) 
C) 10b-5 
D) 16(b) 
A) 504 
B) 14(a)-(e) 
C) 10b-5 
D) 16(b)

Question 7

The Securities Enforcement Remedies and Penny Stock Reform Act of 1990 granted the SEC the power to issue cease and desist orders.

Accepted Answer

A) True 
 B)False

Question 8

If the SEC requires an amendment to a registration, the 20-day waiting period begins again.

Accepted Answer

A) True 
 B)False

Question 9

In 1996, Congress enacted the National Securities Markets Improvements Act which preempted state regulation of certain securities.

Accepted Answer

A) True 
 B)False

Question 10

All of the following are types of illegal insider trading EXCEPT:

Accepted Answer

A) officers or directors who pass valuable information to someone who trades in the company's stock and then is repaid in some way. 
B) an officer or director who makes a direct profit on an investment based on information gained just after the public announcement of a major development. 
C) an officer or director who buys stock and options through overseas financial institutions in his own company prior to a public announcement of information which greatly enhances the value of the stock. 
D) an officer or director of a company who related information for a fee to investment bankers on companies his company is planning to target for takeover. 
A) officers or directors who pass valuable information to someone who trades in the company's stock and then is repaid in some way. 
B) an officer or director who makes a direct profit on an investment based on information gained just after the public announcement of a major development. 
C) an officer or director who buys stock and options through overseas financial institutions in his own company prior to a public announcement of information which greatly enhances the value of the stock. 
D) an officer or director of a company who related information for a fee to investment bankers on companies his company is planning to target for takeover.

Question 11

The 1934 Act rules governing proxy solicitations require a proxy statement describing the material items to be voted upon.

Accepted Answer

A) True 
 B)False

Question 12

The 1934 Securities Exchange Act requires registration of:

Accepted Answer

A) all regulated publicly held companies. 
B) securities being issued initially. 
C) statutory outsiders. 
D) tippees. 
A) all regulated publicly held companies. 
B) securities being issued initially. 
C) statutory outsiders. 
D) tippees.

Question 13

Dryler Corporation sold unregistered securities that were required under the 1933 Act to be registered.Howlett-Midland Corporation used an outdated prospectus in the sale of its securities.Discuss the liability of the companies for these acts.

Accepted Answer

Section 12(a)(1) of the 1933 Act imposes

Question 14

There are rigorously enforced restrictions regarding both number and qualification of investors who purchase securities under Regulation A.

Accepted Answer

A) True 
 B)False

Question 15

Under the Securities Exchange Act of 1934 and the Williams Act, a tender offer:

Accepted Answer

A) must be disclosed if the offeror's acquisition would give him 3 percent of the target's stock. 
B) must be disclosed only to the shareholders of the target corporation. 
C) disclosure is informational to ensure that investors may make an informed decision. 
D) None of these are correct. 
A) must be disclosed if the offeror's acquisition would give him 3 percent of the target's stock. 
B) must be disclosed only to the shareholders of the target corporation. 
C) disclosure is informational to ensure that investors may make an informed decision. 
D) None of these are correct.

Question 16

Bill paid $500,000 for the purchase of a "franchise" in a new professional soccer league.The franchise is in the form of a limited partnership under which Bill is not permitted to actively participate in the management of the team.The promoters of the league are to do all of the management and to make all of the decisions regarding that management.Bill will receive 15% of all gate receipts and revenue generated from the sale of licensed items such as jackets and coffee mugs.Is the "franchise" a security within the meaning of the federal securities laws?

Accepted Answer

The franchise fits the definition of a s

Question 17

The Supreme Court in the SEC v.Edwards case held that an investment scheme promising a fixed rate of return can be an "investment contract" and thus a "security" subject to the federal securities laws.

Accepted Answer

A) True 
 B)False

Question 18

The safe harbor eliminates civil liability if a forward-looking statement is:

Accepted Answer

A) material. 
B) made without actual knowledge that it was false or misleading. 
C) unidentified as a forward-looking statement 
D) All of the above. 
A) material. 
B) made without actual knowledge that it was false or misleading. 
C) unidentified as a forward-looking statement 
D) All of the above.

Question 19

The Securities Exchange Act of 1934 primarily deals with secondary transactions in stock.

Accepted Answer

A) True 
 B)False

Question 20

Effective in 2000, a plain English term sheet is required in all tender offers and mergers.

Accepted Answer

A) True 
 B)False

Exam 40: Securities Regulation

The antifraud provisions of the 1934 Act would prohibit which of the following?

Solicitation includes any request:

Securities sold under Regulation A must be registered if they are resold.

The SEC's 2005 revisions greatly restrict the rules regarding written communications before and during registered securities offerings.

The Securities Act of 1934 imposes significant disclosure requirements upon reporting companies.

The rule that prohibits schemes and devices to defraud investors is Rule:

The Securities Enforcement Remedies and Penny Stock Reform Act of 1990 granted the SEC the power to issue cease and desist orders.

If the SEC requires an amendment to a registration, the 20-day waiting period begins again.

In 1996, Congress enacted the National Securities Markets Improvements Act which preempted state regulation of certain securities.

All of the following are types of illegal insider trading EXCEPT:

The 1934 Act rules governing proxy solicitations require a proxy statement describing the material items to be voted upon.

The 1934 Securities Exchange Act requires registration of:

Dryler Corporation sold unregistered securities that were required under the 1933 Act to be registered.Howlett-Midland Corporation used an outdated prospectus in the sale of its securities.Discuss the liability of the companies for these acts.

There are rigorously enforced restrictions regarding both number and qualification of investors who purchase securities under Regulation A.

Under the Securities Exchange Act of 1934 and the Williams Act, a tender offer:

The Supreme Court in the SEC v.Edwards case held that an investment scheme promising a fixed rate of return can be an "investment contract" and thus a "security" subject to the federal securities laws.

The safe harbor eliminates civil liability if a forward-looking statement is:

The Securities Exchange Act of 1934 primarily deals with secondary transactions in stock.

Effective in 2000, a plain English term sheet is required in all tender offers and mergers.

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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