Exam 41: Corporationssecurities Law Corporate Governance

"Pumping and dumping" occurs when a person buys shares, combines them with shares of the same stock that he or she already owns, and sells them all together.

Chief corporate executives are personally responsible for the accuracy of financial statements filed with the Securities and Exchange Commission.

Scienter is a requirement for liability under Section 10(b) of the Securities Ex?change Act of 1934.

Before filing a registration statement, an issuer must attempt to sell, or at least offer to sell, the securities.

Willful violations of the Sarbanes-Oxley Act of 2002 may be subject to criminal prosecution.

Flo-Thru Corporation is poised to issue securities that, under the Securities Act of 1933, are "exempt." This means that the securities can be sold

Private parties cannot sue violators of the Securities Act of 1933.

Hobie, the chief executive officer of Ideal Gamers, Inc. (IGI), inten?tionally understates the amount of IGI's debts in information provided to investors as part of an issue of IGI stock. Jack buys the stock and suffers a loss. Hobie may be subject to

The key to liability under Section 10(b) of the Securities Act of 1933 and SEC Rule 10b-5 is whether undisclosed inside information is material.

A free-writing prospectus may be used before the Securities and Exchange Commission completes its review of a related registration statement.

To raise $12 million to expand operations, Star Corporation makes a stock offering directly to sixty accredited investors and twenty sophisticated, but unaccredited investors. Star plans to notify the SEC of sales. Under the Securities Act of 1933, this issue may qualify as an "exempt" transaction

Della, an officer for Energy Petrol Corporation (EPC), buys 100 shares of EPC stock. One week later, EPC announces that it will merge with a competitor, Fuel Oil Company, and the price of EPC stock increases. One month later, Della sells her shares for a profit. Under Section 16(b) of the Securities Exchange Act of 1934, Della would not be liable if, after buying the stock, she had waited

Country Golf Club, Inc., wants to issue stock of $1 million in a single offer?ing. Country does not have to provide any investors with any material in?forma?tion about itself, its business, or its securities if

SEC Rule 10b-5 can apply in virtually any case involving the trading of securities.

As part of a stock offering for Equine Corporation, Flem, Equine's accountant, intention?ally misrepresents material facts in the pro?spectus. Gigi buys the stock unaware of the misrepresentation and suf?fers a loss. Flem may be subject to

When Looking Glass Corporation wishes to issue certain securities, it must provide sufficient in?for?mation for Alice, and other unsophisticated investors, to evaluate the fi?nancial risk involved. Specifically, the law imposes liability for making a false statement or omission that is "material." What sort of information would Alice consider material?

Ernie contracts to buy securities from Freda. Later, believing that Freda committed fraud in the deal, Ernie files a suit against her. If Freda is found liable, Ernie may obtain

A corporation can recapture any profits realized by an insider on any purchase or sale of the firm's stock within any twelve-month period.

Section 10(b) of the Securities Exchange Act of 1934 covers only corpo?rate officers, di?rectors, and majority shareholders.

Corporate governance is the relationship between a corporation and its shareholders.