Question 1

According to the Sarbanes-Oxley Act, auditors are required to preserve audit records for a period of:

Accepted Answer

A)  three years. 
B)  five years. 
C)  two years. 
D)  nine years. 
E)  seven years. 
A)  three years. 
B)  five years. 
C)  two years. 
D)  nine years. 
E)  seven years.

Question 2

Whistleblowers who first use a company's internal processes before reporting to the SEC are entitled to potentially higher financial rewards.

Accepted Answer

A) True 
 B)False

Question 3

A(n) _____ is one who controls or is controlled by the issuer, such as a major stockholder of a corporation.

Accepted Answer

A)  seller 
B)  bailee 
C)  underwriter 
D)  guarantor 
E)  controlling person 
A)  seller 
B)  bailee 
C)  underwriter 
D)  guarantor 
E)  controlling person

Question 4

The Securities and Exchange Commission has both quasi-legislative and quasi-judicial powers.

Accepted Answer

A) True 
 B)False

Question 5

The Public Company Accounting Oversight Board was created by the:

Accepted Answer

A)  Securities Act of 1933. 
B)  Securities Exchange Act of 1934. 
C)  Security Fraud Enforcement Act. 
D)  Sarbanes-Oxley Act. 
E)  Sherman Act. 
A)  Securities Act of 1933. 
B)  Securities Exchange Act of 1934. 
C)  Security Fraud Enforcement Act. 
D)  Sarbanes-Oxley Act. 
E)  Sherman Act.

Question 6

Sarbanes-Oxley provides protections for whistleblowers so that individuals are more willing to report the corruption that can lead to major scandals.

Accepted Answer

A) True 
 B)False

Question 7

What is the difference between Section 18 of the 1934 Act and Sections 11 and 12 of the 1933 Act with regard to liability in case of fraud?

Accepted Answer

Two distinctions between Section 18 of t

Question 8

State the new or proposed rules issued by the SEC post the revitalization process initiated by the Sarbanes-Oxley Act of 2002.

Accepted Answer

Sarbanes-Oxley (SOX) increases the SEC's

Question 9

The Public Company Accounting Oversight Board (PCAOB) permits auditing firms to conduct a variety of nonauditing services.

Accepted Answer

A) True 
 B)False

Question 10

An individual who participates in the original distribution of securities by selling such securities for the issuer or by guaranteeing their sale is referred to as the:

Accepted Answer

A)  seller. 
B)  controlling person. 
C)  issuer. 
D)  underwriter. 
E)  bailee. 
A)  seller. 
B)  controlling person. 
C)  issuer. 
D)  underwriter. 
E)  bailee.

Question 11

Liability traditionally has been imposed against violators even though they lacked any wrongful intent.

Accepted Answer

A) True 
 B)False

Question 12

Proof of negligence leading to corporate mismanagement is not enough to prove a case of seller's fraud under Rule 10b-5.

Accepted Answer

A) True 
 B)False

Question 13

Under the 1934 Act, an individual found guilty of filing false or misleading documents with the SEC may be imprisoned up to:

Accepted Answer

A)  5 years. 
B)  10 years. 
C)  15 years. 
D)  20 years. 
E)  25 years. 
A)  5 years. 
B)  10 years. 
C)  15 years. 
D)  20 years. 
E)  25 years.

Question 14

According to the Sarbanes-Oxley Act, the accuracy of the company's financial records is certified by the:

Accepted Answer

A)  CEO and COO. 
B)  COO and CFO. 
C)  CEO and CFO. 
D)  CEO and CIO. 
E)  CFO and CIO. 
A)  CEO and COO. 
B)  COO and CFO. 
C)  CEO and CFO. 
D)  CEO and CIO. 
E)  CFO and CIO.

Question 15

What are the criminal penalties incorporated by the Congress for violating the Securities Exchange Act of 1934?

Accepted Answer

In response to the corporate scandals oc

Question 16

What are the three questions that a court will seek to answer when determining whether a person has purchased a security?

Accepted Answer

Courts seek positive answers to the foll

Question 17

Short-swing profits:

Accepted Answer

A)  refer to any profits made by insiders who buy and sell company stock within a three-month time period. 
B)  rule of Section 16 depends on any misuse of information. 
C)  by insiders, regardless of the insiders' states of mind, are absolutely prohibited. 
D)  requires proof of intent to deceive under Section 10(b). 
E)  liability is created by the Securities Act of 1933. 
A)  refer to any profits made by insiders who buy and sell company stock within a three-month time period. 
B)  rule of Section 16 depends on any misuse of information. 
C)  by insiders, regardless of the insiders' states of mind, are absolutely prohibited. 
D)  requires proof of intent to deceive under Section 10(b). 
E)  liability is created by the Securities Act of 1933.

Question 18

When is the use of nonpublic information not considered a violation of the Security Exchange Act of 1934 provisions?

Accepted Answer

If nonpublic information is deduced inde

Question 19

Contracts to buy and sell securities are finalized during the posteffective period.

Accepted Answer

A) True 
 B)False

Question 20

The Securities Enforcement Remedies Act:

Accepted Answer

A)  allows for the prohibition of an individual's service as an officer or director of a business organization. 
B)  created the SEC. 
C)  changes membership requirements of corporate audit committees. 
D)  requires proof of criminal violation for individual and organizational fines to be imposed. 
E)  refrains from imposing liability on a theory of fraud on any person who shall make or cause to be made any false or misleading statements. 
A)  allows for the prohibition of an individual's service as an officer or director of a business organization. 
B)  created the SEC. 
C)  changes membership requirements of corporate audit committees. 
D)  requires proof of criminal violation for individual and organizational fines to be imposed. 
E)  refrains from imposing liability on a theory of fraud on any person who shall make or cause to be made any false or misleading statements.

Exam 17: Financial and Securities Regulations

According to the Sarbanes-Oxley Act, auditors are required to preserve audit records for a period of:

Whistleblowers who first use a company's internal processes before reporting to the SEC are entitled to potentially higher financial rewards.

A(n) _____ is one who controls or is controlled by the issuer, such as a major stockholder of a corporation.

The Securities and Exchange Commission has both quasi-legislative and quasi-judicial powers.

The Public Company Accounting Oversight Board was created by the:

Sarbanes-Oxley provides protections for whistleblowers so that individuals are more willing to report the corruption that can lead to major scandals.

What is the difference between Section 18 of the 1934 Act and Sections 11 and 12 of the 1933 Act with regard to liability in case of fraud?

State the new or proposed rules issued by the SEC post the revitalization process initiated by the Sarbanes-Oxley Act of 2002.

The Public Company Accounting Oversight Board (PCAOB) permits auditing firms to conduct a variety of nonauditing services.

An individual who participates in the original distribution of securities by selling such securities for the issuer or by guaranteeing their sale is referred to as the:

Liability traditionally has been imposed against violators even though they lacked any wrongful intent.

Proof of negligence leading to corporate mismanagement is not enough to prove a case of seller's fraud under Rule 10b-5.

Under the 1934 Act, an individual found guilty of filing false or misleading documents with the SEC may be imprisoned up to:

According to the Sarbanes-Oxley Act, the accuracy of the company's financial records is certified by the:

What are the criminal penalties incorporated by the Congress for violating the Securities Exchange Act of 1934?

What are the three questions that a court will seek to answer when determining whether a person has purchased a security?

Short-swing profits:

When is the use of nonpublic information not considered a violation of the Security Exchange Act of 1934 provisions?

Contracts to buy and sell securities are finalized during the posteffective period.

The Securities Enforcement Remedies Act:

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