Question 1

Section 5 of the Securities Act of 1933 requires an issuer to register its securities with the SEC prior to selling them to the public.

Accepted Answer

A) True 
 B)False

Question 2

Which of the following is an example of exempt securities?

Accepted Answer

A)  stock dividends and stock splits 
B)  IPOs made by multinational corporations 
C)  securities that have been held by a single investor for longer than a year 
D)  securities worth $1 million or more 
A)  stock dividends and stock splits 
B)  IPOs made by multinational corporations 
C)  securities that have been held by a single investor for longer than a year 
D)  securities worth $1 million or more

Question 3

The Securities Act of 1933 regulates the purchase and sale of securities online.

Accepted Answer

A) True 
 B)False

Question 4

________ requires that any profits made by a statutory insider on transactions involving short-swing profits belong to the corporation.

Accepted Answer

A)  Section 5 of the Securities Act of 1933 
B)  Section 12 of the Securities Act of 1933 
C)  Section 16(b) of the Securities Exchange Act of 1934 
D)  SEC Rule 10b-5 
A)  Section 5 of the Securities Act of 1933 
B)  Section 12 of the Securities Act of 1933 
C)  Section 16(b) of the Securities Exchange Act of 1934 
D)  SEC Rule 10b-5

Question 5

Drafts that have a maturity date of six months are exempt from registration with the SEC.

Accepted Answer

A) True 
 B)False

Question 6

Scissorwire Inc. sells shares of its stock to the public, with each share valued at $16. After a year, the company incurs a loss and the price of each share drops to $5. The company reveals that it had deliberately not registered with the SEC before going public and that it has no money to pay the investors. Which of the following holds well in this context?

Accepted Answer

A)  Scissorwire Inc. can register with the SEC at any point after the dip in shares. 
B)  The U.S. government can file a criminal lawsuit against Scissorwire Inc. to seek criminal penalties. 
C)  The investors have been negligent in not verifying registration before purchase of shares and cannot rescind their purchase. 
D)  Scissorwire Inc. is liable for the violation of the Securities Exchange Act of 1934. 
A)  Scissorwire Inc. can register with the SEC at any point after the dip in shares. 
B)  The U.S. government can file a criminal lawsuit against Scissorwire Inc. to seek criminal penalties. 
C)  The investors have been negligent in not verifying registration before purchase of shares and cannot rescind their purchase. 
D)  Scissorwire Inc. is liable for the violation of the Securities Exchange Act of 1934.

Question 7

A registration form, Form S-1 is normally prepared by a company's founder.

Accepted Answer

A) True 
 B)False

Question 8

Interests in oil, gas, and mineral rights are considered statutorily defined securities.

Accepted Answer

A) True 
 B)False

Question 9

Which of the following must be included in the registration statement?

Accepted Answer

A)  judgments passed by the SEC on the merits of the securities offered 
B)  how proceeds from the offering will be used 
C)  date of termination of the initial public offering 
D)  maximum number of times a share can be sold post issue 
A)  judgments passed by the SEC on the merits of the securities offered 
B)  how proceeds from the offering will be used 
C)  date of termination of the initial public offering 
D)  maximum number of times a share can be sold post issue

Question 10

The Jumpstart our Business Startups Act (JOBS Act) was enacted in 2012 ________.

Accepted Answer

A)  as a section of the Securities Act of 1933 
B)  as a section of the Securities Exchange Act of 1934 
C)  by Congress 
D)  by the Dodd-Frank Wall Street Reform and Consumer Protection Act 
A)  as a section of the Securities Act of 1933 
B)  as a section of the Securities Exchange Act of 1934 
C)  by Congress 
D)  by the Dodd-Frank Wall Street Reform and Consumer Protection Act

Question 11

A registration statement need not contain details on how the proceeds from the offering will be used.

Accepted Answer

A) True 
 B)False

Question 12

Civil liability under Section 11 is imposed on issuers who are negligent in not discovering the fraud in their security offerings.

Accepted Answer

A) True 
 B)False

Question 13

Which of the following has the largest trading volume of any securities exchange in the world?

Accepted Answer

A)  NYSE 
B)  Euronext 
C)  NASDAQ 
D)  London Stock Exchange 
A)  NYSE 
B)  Euronext 
C)  NASDAQ 
D)  London Stock Exchange

Question 14

Investors who purchased unregistered securities can rescind their purchase but not recover damages.

Accepted Answer

A) True 
 B)False

Question 15

Only an established company is permitted to sell new securities to the public.

Accepted Answer

A) True 
 B)False

Question 16

Section 10(b) of the Securities Exchange Act prohibits the use of manipulative and deceptive devices in contravention of the rules and regulations prescribed by the SEC.

Accepted Answer

A) True 
 B)False

Question 17

Section 12 of the Securities Act of 1933 provides purchasers who have been injured by securities pursuant to an unwarranted exemption to rescind the securities purchase.

Accepted Answer

A) True 
 B)False

Question 18

Which of the following is enough to prove a violation of Section 10(b) and Rule 10b-5?

Accepted Answer

A)  nonexemption status 
B)  scienter 
C)  aiding and abetting 
D)  negligent conduct 
A)  nonexemption status 
B)  scienter 
C)  aiding and abetting 
D)  negligent conduct

Question 19

How does a company sell its shares to the public for the first time? Explain the contents of a registration statement.

Accepted Answer

The issuance of securities by an issuer

Question 20

During the review of a registration statement, the SEC does not pass judgment on the merits of the securities offered.

Accepted Answer

A) True 
 B)False

Exam 41: Investor Protection and E-Securities Transactions

Section 5 of the Securities Act of 1933 requires an issuer to register its securities with the SEC prior to selling them to the public.

Which of the following is an example of exempt securities?

The Securities Act of 1933 regulates the purchase and sale of securities online.

________ requires that any profits made by a statutory insider on transactions involving short-swing profits belong to the corporation.

Drafts that have a maturity date of six months are exempt from registration with the SEC.

A registration form, Form S-1 is normally prepared by a company's founder.

Interests in oil, gas, and mineral rights are considered statutorily defined securities.

Which of the following must be included in the registration statement?

The Jumpstart our Business Startups Act (JOBS Act) was enacted in 2012 ________.

A registration statement need not contain details on how the proceeds from the offering will be used.

Civil liability under Section 11 is imposed on issuers who are negligent in not discovering the fraud in their security offerings.

Which of the following has the largest trading volume of any securities exchange in the world?

Investors who purchased unregistered securities can rescind their purchase but not recover damages.

Only an established company is permitted to sell new securities to the public.

Section 10(b) of the Securities Exchange Act prohibits the use of manipulative and deceptive devices in contravention of the rules and regulations prescribed by the SEC.

Section 12 of the Securities Act of 1933 provides purchasers who have been injured by securities pursuant to an unwarranted exemption to rescind the securities purchase.

Which of the following is enough to prove a violation of Section 10(b) and Rule 10b-5?

How does a company sell its shares to the public for the first time? Explain the contents of a registration statement.

During the review of a registration statement, the SEC does not pass judgment on the merits of the securities offered.

Legal Heritage and the Digital Age

Courts and Jurisdiction

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Constitutional Law for Business and E-Commerce

Intentional Torts and Negligence

Product and Strict Liability

Intellectual Property and Cyber Piracy

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Nature of Traditional and E-Contracts

Agreement

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Capacity and Legality

Genuineness of Assent and Undue Influence

Statute of Frauds and Equitable Exceptions

Third-Party Rights and Discharge

Remedies for Breach of Traditional and E-Contracts

Digital Law and E-Commerce

Formation of Sales and Lease Contracts

Title to Goods and Risk of Loss

Remedies for Breach of Sales and Lease Contracts

Warranties

Creation of Negotiable Instruments

Holder in Due Course and Transferability

Liability, Defenses, and Discharge

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