Exam 42: Securities Law Corporate Governance

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

The Securities and Exchange Commission does not regulate the content of proxy statements.

The Securities and Exchange Commission interprets federal securities laws, but does not investigate violations.

Under the Sarbanes-Oxley Act of 2002, chief executive officers no longer need to certify the accuracy of information in corporate financial statements.

Players Video Game Centers, Inc., wants to issue stock of $1 million in a single offering. Players must provide all investors with material information about itself, its business, and its securities if

Catalina promises high returns to Darby and other investors, who then agree to trust their funds to Catalina. She uses these funds to pay previous investors. This is

Ridgeline Sports Gear, Inc., is required to register its securities under Section 12 of the Securities Exchange Act of 1934. Section 16(b) of the act covers

Fact Pattern 42-1A Fresh Fruits & Veggies, Inc., wants to make an initial public offering of securi¬ties. Fresh believes that it qualifies for an exemption under Regulation A from the full registration requirement of the federal Securities Act of 1933. -Refer to Fact Pattern 42-1A. Fresh decides to sell its new securities via the Internet. This offering

For criminal sanctions to be imposed under Section 10(b) of the Securities Exchange Act of 1934 and SEC Rule 10b-5, scienter must not exist.

The definition of security in the Securities Act of 1933 does not include instruments and interests commonly known as securities.

Selling securities after the effective date of the registration statement results in liability.

State corporation statues set up the legal framework for corporate governance.

Standard Corporation is a public company whose shares are traded in public securities markets. Standard's officers want to set up and maintain a system of "good corporate governance." What is "corporate governance" What is its practical significance What, at a minimum, should a "good" system of corporate governance include

New Discoveries Corporation, and its officers, directors, and shareholders, buy and sell securities. Section 10(b) of the Securities Exchange Act of 1934 applies to

For a defendant to be convicted in a criminal prosecution under the securities laws, there can be no reasonable doubt that the defendant knew he or she was acting wrongfully.

Anyone who wrongfully obtains inside information and trades on it for his or her personal gain can be liable under SEC Rule 10b-5.

Accredited investors include banks, but not investment companies.

RingTone Corporation is a public company whose securities are traded among investors. Under the Securities Act of 1933, a security is

"Forward-looking" financial forecasts are protected against liability for securities fraud.

In May, National Biotech Corporation generally advertises that it will make a $4 million offering of stock in June. National makes the offering as advertised and, ten days after the first sale, notifies the Securities and Exchange Commission (SEC). All buyers of the stock are given material information about the company, its business, and the stock. Before the end of the year, the offering is completely sold out. The buyers include forty unaccredited investors and fifty accredited investors. National does not register the offering. The SEC files a suit against National, seeking civil sanctions on the ground that this offering was not exempt from registration. National argues that the applicable exemption is Rule 505 of Regulation D of the Securities Act of 1933 and that because of this exemption, any resale of the stock is also exempt. Who is correct