Question 1

Fact Pattern 21-3
Yolanda has filed the registration statement, in connection with a public offering of stock in ABC Corgi, a company dedicated to the production of clothing and toys highlighting the highly prized Welsh Corgi breed of dog. The registration statement is not yet effective. Yolanda would like to move forward with promoting the company as much as possible. She asks for advice regarding activities in which she could legally participate. She is particularly interested in making presentations to large institutional investors.
-Refer to Fact Pattern 21-3.Which of the following is true regarding Yolanda's situation?

Accepted Answer

A)   Because she is in the active period, no sales of securities are allowed.
B)   During this quiet period, offers to buy may be accepted.
C)   During this waiting period, so long as requirements are met, she may solicit offers to buy securities but may not accept them yet.
D)   During this quiet period, no sales of securities are allowed; and the red herring may not be distributed C

Question 2

Proxies give the proxy holder the right to vote the shares owned by the person who signs the proxy card.

Accepted Answer

A) True 
 B)False  True

Question 3

Which of the following is NOT considered a traditional shelf offering?

Accepted Answer

A)   Securities offered pursuant to employee benefit plans
B)   Securities offered pursuant to dividend reinvestment plans
C)   Securities issued to alter voting rights for shareholders
D)   Securities issued in connection with business combination transactions C

Question 4

Any transaction that involves an investment of money in a common enterprise with profits to come solely from the efforts of others is deemed to be a(n)__________ and thus a security.

Accepted Answer

A)   stock issuance
B)   investment contract
C)   secured sale
D)   committed sale

Question 5

In CASE 21.1 Lawson v.FMR,LLC (2014),the question before the U.S.Supreme Court was whether the __________ Act whistleblower protections extended to __________ of __________ contractors of __________ corporations.

Accepted Answer

A)   Sarbanes-Oxley, employees, private, public
B)   SEC 1934, employers, public, private
C)   Private Securities Litigation Reform Act, employees, private, public
D)   SEC 1933, employers, private, public

Question 6

Under the Sarbanes-Oxley Act,discriminating against or discharging an informant is:

Accepted Answer

A)   punishable by a fine only.
B)   punishable by a substantial fine or imprisonment for as long as ten years, but not both.
C)   punishable by a substantial fine or imprisonment for as long as ten years, or both.
D)   not addressed.

Question 7

CASE 21.3In re Lehman Bros.Mortgage-Backed Securities Litigation (2011)involved a question of whetherrating agencies that helped select a pool of mortgages for a mortgage-backed security were "underwriters" under the 1933 Act or "controlling persons" under section 15 of the 1933 Act.How did the court rule?

Accepted Answer

A)   The court ruled that the proof established that the rating agencies were both underwriters and controlling persons under the 1933 Act.
B)   The court ruled that the proof failed to establish that the rating agencies were either underwriters or controlling persons under the 1933 Act.
C)   The court ruled that the proof established that the rating agencies were underwriters under the 1933 Act but that the proof failed to establish that the rating agencies were controlling persons under the 1933 Act.
D)   The court ruled that the proof established that the rating agencies were controlling persons under the 1933 Act but that the proof failed to establish that the rating agencies were underwriters under the 1933 Act.

Question 8

"Crowdfunding" is an internet-based,fund-raising method certain startups and other small businesses can use to raise relatively small amounts of money from a large number of individuals.

Accepted Answer

A) True 
 B)False

Question 9

Fact Pattern 21-1
Joan enjoys cross stitching, and her husband, John, makes items using a woodworking process. They would like to make more items and open a small shop selling their handiwork, but they need additional capital with which to purchase raw materials, rent space, and advertise. Joan and John discuss the idea with their neighbors during the annual neighborhood picnic. A number of the neighbors say that they would like to invest in the project. This was entirely the initial idea of the neighbors, and Joan and John did not coerce them in any way. Joan and John, however, quickly draw up contracts that the neighbors signed providing that each investor would receive a certain interest in the shop. An attorney who lived in the neighborhood and specialized in family law asked if there were some laws that John and Joan needed to satisfy in order to seek investors. The neighborhood consensus, however, was that, so long as no one was misled and acted voluntarily, no problem existed. John and Joan proceeded with the shop and made a significant amount of profit. Disagreements arose among the neighbors, however, regarding exactly who was entitled to what.
-Refer to Fact Pattern 21-1.Which of the following is true regarding the application of federal securities laws to John and Joan's situation?

Accepted Answer

A)   The arrangement with the neighbors was at the suggestion of the neighbors; and federal security law would, therefore, not apply.
B)   Contracts such as those involved with the neighbors would not be considered securities and, therefore, federal securities law would not apply.
C)   Contracts such as those involved with the neighbors appear to be securities; but state law, not federal law, would apply.
D)   Contracts such as those involved with the neighbors would be considered securities; and, therefore, federal securities law would apply.

Question 10

A __________ offering of securities is a subsequent offering by a person other than the issuer.

Accepted Answer

A)   secondary
B)   restricted
C)   blank check
D)   shelf

Question 11

Mere promotion of a security makes a person a seller and,therefore,liable under section 5 of the 1933 Act based upon the sale of a security without an effective registration statement or by means of a noncomplying prospectus.

Accepted Answer

A) True 
 B)False

Question 12

A company that decides to abandon a proposed public offering due,for example,to a lack of investor interest,must wait at least eighteen months before shifting to a private offering.

Accepted Answer

A) True 
 B)False

Question 13

A prospectus is a selling document as well as a disclosure document.

Accepted Answer

A) True 
 B)False

Question 14

The __________ is the private offering counterpart to the prospectus.

Accepted Answer

A)   private registration prospectus
B)   red-herring prospectus
C)   private-placement memorandum
D)   restricted sale

Question 15

Which of the following is NOT true regarding the Sarbanes-Oxley Act?

Accepted Answer

A)   The Act mandates the composition and authority of audit committees at public companies.
B)   The Act prohibits personal loans to executives.
C)   The Act requires corporations to disclose whether they have a code of ethics applicable to senior financial officers and, if not, to disclose why not.
D)   The Act gives the SEC the authority to prohibit unfit persons from serving as officers or directors of a public company for a period of five years.

Question 16

Which of the following activities are NOT regulated by the 1934 Act?

Accepted Answer

A)   Primary securities sales
B)   Proxy solicitations
C)   Insider trading
D)   Tender offers

Question 17

If an issuer makes successive sales within a limited period of time,the SEC may __________ the successive sales,resulting in the loss of a private-offering exemption.

Accepted Answer

A)   restrict
B)   register
C)   integrate
D)   qualify

Question 18

The Sarbanes-Oxley Act created the Public Company Accounting Oversight Board.

Accepted Answer

A) True 
 B)False

Question 19

Shelf registration under the Securities Act of 1933 allows registration of a number of securities at one time for issuance later.

Accepted Answer

A) True 
 B)False

Question 20

Investment banking firms are prohibited by federal law from underwriting public offerings of securities.

Accepted Answer

A) True 
 B)False

Exam 21: Public and Private Offerings of Securities.

Proxies give the proxy holder the right to vote the shares owned by the person who signs the proxy card.

Which of the following is NOT considered a traditional shelf offering?

Any transaction that involves an investment of money in a common enterprise with profits to come solely from the efforts of others is deemed to be a(n) __________ and thus a security.

In CASE 21.1 Lawson v.FMR,LLC (2014) ,the question before the U.S.Supreme Court was whether the Act whistleblower protections extended to of contractors of corporations.

Under the Sarbanes-Oxley Act,discriminating against or discharging an informant is:

"Crowdfunding" is an internet-based,fund-raising method certain startups and other small businesses can use to raise relatively small amounts of money from a large number of individuals.

A __________ offering of securities is a subsequent offering by a person other than the issuer.

Mere promotion of a security makes a person a seller and,therefore,liable under section 5 of the 1933 Act based upon the sale of a security without an effective registration statement or by means of a noncomplying prospectus.

A company that decides to abandon a proposed public offering due,for example,to a lack of investor interest,must wait at least eighteen months before shifting to a private offering.

A prospectus is a selling document as well as a disclosure document.

The __________ is the private offering counterpart to the prospectus.

Which of the following is NOT true regarding the Sarbanes-Oxley Act?

Which of the following activities are NOT regulated by the 1934 Act?

If an issuer makes successive sales within a limited period of time,the SEC may __________ the successive sales,resulting in the loss of a private-offering exemption.

The Sarbanes-Oxley Act created the Public Company Accounting Oversight Board.

Shelf registration under the Securities Act of 1933 allows registration of a number of securities at one time for issuance later.

Investment banking firms are prohibited by federal law from underwriting public offerings of securities.

Exam 21: Public and Private Offerings of Securities.

Proxies give the proxy holder the right to vote the shares owned by the person who signs the proxy card.

Which of the following is NOT considered a traditional shelf offering?

Any transaction that involves an investment of money in a common enterprise with profits to come solely from the efforts of others is deemed to be a(n) __________ and thus a security.

In CASE 21.1 Lawson v.FMR,LLC (2014) ,the question before the U.S.Supreme Court was whether the __________ Act whistleblower protections extended to __________ of __________ contractors of __________ corporations.

Under the Sarbanes-Oxley Act,discriminating against or discharging an informant is:

"Crowdfunding" is an internet-based,fund-raising method certain startups and other small businesses can use to raise relatively small amounts of money from a large number of individuals.

A __________ offering of securities is a subsequent offering by a person other than the issuer.

Mere promotion of a security makes a person a seller and,therefore,liable under section 5 of the 1933 Act based upon the sale of a security without an effective registration statement or by means of a noncomplying prospectus.

A company that decides to abandon a proposed public offering due,for example,to a lack of investor interest,must wait at least eighteen months before shifting to a private offering.

A prospectus is a selling document as well as a disclosure document.

The __________ is the private offering counterpart to the prospectus.

Which of the following is NOT true regarding the Sarbanes-Oxley Act?

Which of the following activities are NOT regulated by the 1934 Act?

If an issuer makes successive sales within a limited period of time,the SEC may __________ the successive sales,resulting in the loss of a private-offering exemption.

The Sarbanes-Oxley Act created the Public Company Accounting Oversight Board.

Shelf registration under the Securities Act of 1933 allows registration of a number of securities at one time for issuance later.

Investment banking firms are prohibited by federal law from underwriting public offerings of securities.

In CASE 21.1 Lawson v.FMR,LLC (2014) ,the question before the U.S.Supreme Court was whether the Act whistleblower protections extended to of contractors of corporations.