Exam 43: Securities Regulation

Atlas Pizza plans to sell $500,000 worth of stock in the next year. This stock will be exempt from registration under Regulation A as long as:

The Reform Act provides a safe harbor eliminating civil liability if a forward-looking statement is:

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

The Foreign Corrupt Practices Act makes it illegal for an American company to pay money to a foreign official to influence a decision of that person in his official capacity.

The profits realized for violation of Rule 16(b) are given directly to the shareholders as a penalty to the corporation.

Under the 1934 Act:

The Securities and Exchange Commission (SEC) consists of five commissioners.

Under Regulation A, as amended in 1992, an issuer may make offers upon filing the offering statement but may make sales only after the SEC has qualified the statement.

The SEC's computer system that performs automated collection, validation, indexing, acceptance, and dissemination of reports required to be filed with the SEC is known as:

Insiders would violate the short-swing profits rule (Rule 16b) of the 1934 Act by buying stock on January 1 and selling on May 1.

The Klodhoffer Corporation has assets amounting to $2 million and needs additional capital to finance expansion of its marketing operation. The board of directors decides to promote an issue of $500,000 of common stock in order to raise capital. At the time the stock is issued, Klodhoffer has 250 shareholders owning common stock. If Klodhoffer is to trade the stock over the counter, does it need to register with the SEC?

A registration statement becomes public immediately on filing with the SEC, but a prospectus only becomes public upon signature of the chief financial officer.

The 1933 Securities Act differs from the 1934 Act in that the latter deals with issuing stock and the former has to do with trading stock that has already been issued.

Under Regulation A, as amended in 1992, issuers may use a simple question-and-answer disclosure document.

Rule 10b-5 applies to:

If Terry makes tender offer to the owners of Pizza Village registered stock, he must file a statement with the SEC if he:

The definition of "insider" is consistent between Rule 10b-5 and Section 16(b) of the 1934 Act.

Registration requirements are the same under the 1933 and 1934 Acts.

The 1933 Securities Act defines the term "security." The courts have generally interpreted the statutory definition to include non-traditional forms of investments. The Supreme Court of the United States has adopted a two-tier analysis of what constitutes a security. Within this analysis the Court has used a three-part test to determine whether a non-traditional financial transaction constitutes an investment contract and thus a security. Explain: (a) the 1933 Act's statutory definition of security, (b) the courts' general interpretation of the 1933 Act's definition and (c) the Supreme Court's two-tier test

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