Question 1

Sarbanes-Oxley provides that whenever there is a restatement of the company's financial condition, then the executives:

Accepted Answer

A)  would be morally rather than legally culpable for the bonuses paid as a result of the incorrect financial statements. 
B)  have to forfeit their salaries to cover for the amount of the bonuses paid to them on the basis of incorrect financial statements. 
C)  would not be legally bound to return any bonuses paid as a result of the incorrect financial statements. 
D)  must return any bonuses paid as a result of the incorrect financial statements along with the interest. 
E)  must return any bonuses paid as a result of the incorrect financial statements. 
A)  would be morally rather than legally culpable for the bonuses paid as a result of the incorrect financial statements. 
B)  have to forfeit their salaries to cover for the amount of the bonuses paid to them on the basis of incorrect financial statements. 
C)  would not be legally bound to return any bonuses paid as a result of the incorrect financial statements. 
D)  must return any bonuses paid as a result of the incorrect financial statements along with the interest. 
E)  must return any bonuses paid as a result of the incorrect financial statements.

Question 2

The Private Securities Litigation Reform Act mandated that:

Accepted Answer

A)  plaintiffs could proceed with minimal evidence of fraud. 
B)  only the SEC could pursue claims against third parties not directly responsible for a securities law violation. 
C)  the PCAOB was given the authority to decide whether third parties not directly responsible for a securities law violation were nevertheless involved so closely with the violation that they could have claims pursued against. 
D)  private plaintiffs who suffered injury could maintain private causes of action against third parties not directly responsible for a securities law violation. 
E)  the FTC could pursue claims against third parties not directly responsible for a securities law violation. 
A)  plaintiffs could proceed with minimal evidence of fraud. 
B)  only the SEC could pursue claims against third parties not directly responsible for a securities law violation. 
C)  the PCAOB was given the authority to decide whether third parties not directly responsible for a securities law violation were nevertheless involved so closely with the violation that they could have claims pursued against. 
D)  private plaintiffs who suffered injury could maintain private causes of action against third parties not directly responsible for a securities law violation. 
E)  the FTC could pursue claims against third parties not directly responsible for a securities law violation.

Question 3

A plaintiff in a Rule 10b-5 suit is not required to prove damages in order to prevail.

Accepted Answer

A) True 
 B)False

Question 4

The Securities Exchange Act makes it illegal to sell a security on a national exchange unless a registration is effective for the security.

Accepted Answer

A) True 
 B)False

Question 5

The prospectus provides expert analysis of a particular security's expectations of future worth.

Accepted Answer

A) True 
 B)False

Question 6

When is a prospectus issued, what is its purpose, and what has the SEC specified as requirements to be contained in the prospectus?

Accepted Answer

The prospectus is issued during the post

Question 7

It is legal to sell a covered security during the prefiling period.

Accepted Answer

A) True 
 B)False

Question 8

The Uniform Securities Act has been the model for blue sky laws.

Accepted Answer

A) True 
 B)False

Question 9

The law prohibits the sale of worthless securities.

Accepted Answer

A) True 
 B)False

Question 10

_____ refers to the intent of a defendant-seller to deceive or mislead.

Accepted Answer

A)  Handhabend 
B)  Double jeopardy 
C)  Per minas 
D)  Mens rea 
E)  Scienter 
A)  Handhabend 
B)  Double jeopardy 
C)  Per minas 
D)  Mens rea 
E)  Scienter

Question 11

The burden of proof when alleging a due diligence defense is on the expert.

Accepted Answer

A) True 
 B)False

Question 12

What provisions have been made by the Sarbanes-Oxley Act to provide protection for whistleblowers?

Accepted Answer

Sarbanes-Oxley provides protections for

Question 13

Who is liable under the Section 11 civil liability provision dealing with registration statements?

Accepted Answer

The civil liability provision dealing wi

Question 14

Fraud occurs when any material fact is omitted from a prospectus causing a statement to be misleading.

Accepted Answer

A) True 
 B)False

Question 15

A person cannot be considered an insider unless he/she owns at least 51 percent of a security.

Accepted Answer

A) True 
 B)False

Question 16

The process of registration created by the Uniform Securities Act is known as registration by:

Accepted Answer

A)  coordination. 
B)  notification. 
C)  qualification. 
D)  pronouncement. 
E)  announcement. 
A)  coordination. 
B)  notification. 
C)  qualification. 
D)  pronouncement. 
E)  announcement.

Question 17

What was the purpose of the Private Securities Litigation Reform Act of 1995? What are some of the provisions of the Act?

Accepted Answer

The Private Securities Litigation Reform

Question 18

Sarbanes-Oxley requires that information pertaining to an insider's transaction be filed:

Accepted Answer

A)  by mail, postmarked within two business days of the transaction. 
B)  electronically within two business days of the transaction. 
C)  by any effective means within 10 business days of the transaction. 
D)  by any effective means within 10 business days after the close of the calendar month in which the transaction occurred. 
E)  electronically on the day of the transaction. 
A)  by mail, postmarked within two business days of the transaction. 
B)  electronically within two business days of the transaction. 
C)  by any effective means within 10 business days of the transaction. 
D)  by any effective means within 10 business days after the close of the calendar month in which the transaction occurred. 
E)  electronically on the day of the transaction.

Question 19

Explain the concept of fraud under Section 10(b) of the Securities Exchange Act of 1934.

Accepted Answer

The concept of fraud under Section 10(b)

Question 20

According to the Securities Act of 1933, which of the following is considered legal during the prefiling period?

Accepted Answer

A)  Selling a covered security. 
B)  Negotiations and agreements with underwriters. 
C)  Offering to sell a covered security. 
D)  Offering to buy a covered security. 
E)  Sellers may solicit offers for later acceptance. 
A)  Selling a covered security. 
B)  Negotiations and agreements with underwriters. 
C)  Offering to sell a covered security. 
D)  Offering to buy a covered security. 
E)  Sellers may solicit offers for later acceptance.

Exam 17: Financial and Securities Regulations

Sarbanes-Oxley provides that whenever there is a restatement of the company's financial condition, then the executives:

The Private Securities Litigation Reform Act mandated that:

A plaintiff in a Rule 10b-5 suit is not required to prove damages in order to prevail.

The Securities Exchange Act makes it illegal to sell a security on a national exchange unless a registration is effective for the security.

The prospectus provides expert analysis of a particular security's expectations of future worth.

When is a prospectus issued, what is its purpose, and what has the SEC specified as requirements to be contained in the prospectus?

It is legal to sell a covered security during the prefiling period.

The Uniform Securities Act has been the model for blue sky laws.

The law prohibits the sale of worthless securities.

_____ refers to the intent of a defendant-seller to deceive or mislead.

The burden of proof when alleging a due diligence defense is on the expert.

What provisions have been made by the Sarbanes-Oxley Act to provide protection for whistleblowers?

Who is liable under the Section 11 civil liability provision dealing with registration statements?

Fraud occurs when any material fact is omitted from a prospectus causing a statement to be misleading.

A person cannot be considered an insider unless he/she owns at least 51 percent of a security.

The process of registration created by the Uniform Securities Act is known as registration by:

What was the purpose of the Private Securities Litigation Reform Act of 1995? What are some of the provisions of the Act?

Sarbanes-Oxley requires that information pertaining to an insider's transaction be filed:

Explain the concept of fraud under Section 10(b) of the Securities Exchange Act of 1934.

According to the Securities Act of 1933, which of the following is considered legal during the prefiling period?

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