Question 1

Registration of securities with the SEC guarantees to a potential investor the financial soundness of the business represented by the stock.

Accepted Answer

A) True 
 B)False

Question 2

All of the following are exempt from registration under the 1933 Act except:

Accepted Answer

A) government bonds. 
B) securities issued by for-profit medical facilities. 
C) notes with a maturity of not more than nine months when issued for working capital. 
D) state-regulated insurance company annuities.

Question 3

Which of the following would NOT be exempt from registration under the 1933 Securities Act?

Accepted Answer

A) An offering restricted to the residents of the state in which the issuing company is a resident and doing business. 
B) An offering by a noninvestment company issuer for $4 million in securities over 12 months without general advertising or general solicitation. 
C) An offering of limited partnership tax shelters. 
D) A private offering to sophisticated investors who will not redistribute them.

Question 4

The Securities Act of 1933 is also called the "Truth in Securities Act."

Accepted Answer

A) True 
 B)False

Question 5

Hugo wishes to raise money for his restaurant.He offers to sell stock to his brothers,sisters,aunts,uncles,and cousins.The offering is made by telephone to each of the investors and amounts to a stock offering in the total dollar amount of $1.5 million.The offering is made to a total of 38 family members and no notice is given to the SEC.Is this a permissible exempt offering under the federal securities laws?

Accepted Answer

The answer of Hugo wishes to raise money for his...

Question 6

Effective in 2000,a plain English term sheet is required in all tender offers and mergers.

Accepted Answer

A) True 
 B)False

Question 7

Rule 10b-5 applies to any:

Accepted Answer

A) buyer of a registered security. 
B) seller of a registered security. 
C) person who buys or sells a registered security. 
D) person who buys or sells any security.

Question 8

Most states require the registration of securities and regulate brokers and dealers.

Accepted Answer

A) True 
 B)False

Question 9

There are rigorously enforced restrictions regarding both number and qualification of investors who purchase securities under Regulation A.

Accepted Answer

A) True 
 B)False

Question 10

Securities sold under Regulation A must be registered if they are resold.

Accepted Answer

A) True 
 B)False

Question 11

The Sarbanes-Oxley Act requires either the chief executive officer or the chief financial officer of a company issuing securities to certify information in the issuer's annual and quarterly reports.

Accepted Answer

A) True 
 B)False

Question 12

If Caroline,a lawyer,was being held liable for a misstatement in a registration statement,her defense(s)would be:

Accepted Answer

A) she was only following directions. 
B) she had reasonable grounds to believe her information was true. 
C) she was not responsible for the portion that contained the misstatement. 
D) All of the above. 
E) Both (b) and (c) above are correct.

Question 13

The provisions of Section 17(a)of the 1933 Act:

Accepted Answer

A) primarily allow for a private right of action for persons injured by the act. 
B) make it unlawful to engage in any transaction, practice, or course of business that operates as deceit upon the issuer. 
C) make it unlawful in the offer or sale of any securities to obtain property by any statement that omits a material fact without which the information is misleading. 
D) None of the above.

Question 14

The due diligence defense generally requires the defendant to show that he had reasonable grounds to believe and did believe that there were no untrue statements or material omissions.

Accepted Answer

A) True 
 B)False

Question 15

Which of the following would ordinarily NOT be considered a security under the federal securities laws?

Accepted Answer

A) Bonds. 
B) Stocks. 
C) Investments in limited partnerships. 
D) An investment in a nonprofit venture based on one's own entrepreneurial efforts.

Question 16

Marge wishes to raise some money to begin mass producing her prize-winning jellies and jams.She offers her neighbors a portion of her profits if they will put up $2,000 each towards her endeavor.Is their investment a "security"?

Accepted Answer

A) Yes, since Marge will do all the work. 
B) Yes, because her neighbors will have a security interest in the jelly. 
C) No, since the neighbors are putting no effort into it. 
D) No, because Marge is not issuing stock certificates.

Question 17

Rule 505,as promulgated by the SEC,provides a nonexclusive safe harbor for securing the intrastate exemption.

Accepted Answer

A) True 
 B)False

Question 18

Under the Securities Exchange Act of 1934 and the Williams Act,a tender offer:

Accepted Answer

A) must be disclosed if the offeror's acquisition would give him 3 percent of the target's stock. 
B) must be disclosed only to the shareholders of the target corporation. 
C) disclosure is informational to ensure that investors may make an informed decision. 
D) None of these are correct.

Question 19

As amended in 2008,SEC Rule 144 imposes stricter requirements on securities resales of issuers subject to 1934 Act reporting requirements than on securities resales of non-reporting issuers.

Accepted Answer

A) True 
 B)False

Question 20

The antifraud provisions of the 1933 Act pertain to only registered securities.

Accepted Answer

A) True 
 B)False

Exam 39: Securities Regulation

Registration of securities with the SEC guarantees to a potential investor the financial soundness of the business represented by the stock.

All of the following are exempt from registration under the 1933 Act except:

Which of the following would NOT be exempt from registration under the 1933 Securities Act?

The Securities Act of 1933 is also called the "Truth in Securities Act."

Effective in 2000,a plain English term sheet is required in all tender offers and mergers.

Rule 10b-5 applies to any:

Most states require the registration of securities and regulate brokers and dealers.

There are rigorously enforced restrictions regarding both number and qualification of investors who purchase securities under Regulation A.

Securities sold under Regulation A must be registered if they are resold.

The Sarbanes-Oxley Act requires either the chief executive officer or the chief financial officer of a company issuing securities to certify information in the issuer's annual and quarterly reports.

If Caroline,a lawyer,was being held liable for a misstatement in a registration statement,her defense(s) would be:

The provisions of Section 17(a) of the 1933 Act:

The due diligence defense generally requires the defendant to show that he had reasonable grounds to believe and did believe that there were no untrue statements or material omissions.

Which of the following would ordinarily NOT be considered a security under the federal securities laws?

Marge wishes to raise some money to begin mass producing her prize-winning jellies and jams.She offers her neighbors a portion of her profits if they will put up $2,000 each towards her endeavor.Is their investment a "security"?

Rule 505,as promulgated by the SEC,provides a nonexclusive safe harbor for securing the intrastate exemption.

Under the Securities Exchange Act of 1934 and the Williams Act,a tender offer:

As amended in 2008,SEC Rule 144 imposes stricter requirements on securities resales of issuers subject to 1934 Act reporting requirements than on securities resales of non-reporting issuers.

The antifraud provisions of the 1933 Act pertain to only registered securities.