Question 1

The federal government alone regulates the sale of securities.

Accepted Answer

A) True 
 B)False  False

Question 2

The antifraud provisions of the 1933 Act pertain to both unregistered and registered securities.

Accepted Answer

A) True 
 B)False  True

Question 3

Which of the following is NOT true about private placement exemptions that do not involve any public offering?

Accepted Answer

A) Registration or disclosure is never required 
B) General solicitation of purchasers is not allowed 
C) Resale of securities is restricted 
D) None of these 
A) Registration or disclosure is never required 
B) General solicitation of purchasers is not allowed 
C) Resale of securities is restricted 
D) None of these A

Question 4

The Securities Enforcement Remedies and Penny Stock Reform Act of 1990 gives the SEC power to issue cease and desist orders and to impose criminal fines up to $1 million.

Accepted Answer

A) True 
 B)False

Question 5

Which of the following are exemptions for non-issuers?

Accepted Answer

A) Securities up to $1.5 million in any 12-month period if compliance with Regulation A is achieved. 
B) Sales of restricted or nonrestricted securities by affiliates. 
C) Resales of restricted securities acquired under Regulation D. 
D) The 1933 Act offers no exemptions from registration for sales by non-issuers. 
A) Securities up to $1.5 million in any 12-month period if compliance with Regulation A is achieved. 
B) Sales of restricted or nonrestricted securities by affiliates. 
C) Resales of restricted securities acquired under Regulation D. 
D) The 1933 Act offers no exemptions from registration for sales by non-issuers.

Question 6

The 1934 Act applies only to stock traded on a national exchange for companies whose corporate assets exceed $10 million.

Accepted Answer

A) True 
 B)False

Question 7

The Orange Grove Limited Partnership would like to make an offering of $2 million in limited partnership interests under either Rule 505 or Rule 506 of Regulation D of the Securities Act of 1933.Orange Grove plans to sell to 40 investors, eight of whom have net incomes in excess of $200,000 per year and net worth of more than $2 million.
The 40 investors also include five mutual funds and three insurance companies.The other investors to whom Orange Grove plans to sell are not experienced investors.Is either Rule 505 or Rule 506 available to the Orange Grove Partnership?

Accepted Answer

Rule 505 is available, but Rule 506 is n

Question 8

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

Accepted Answer

A) True 
 B)False

Question 9

Bob buys a share of Atlas Pizza, which is unregistered.If it was not exempt from registration, Bob may return the stock and get his money back.

Accepted Answer

A) True 
 B)False

Question 10

Section 16(b) differs from Rule 10b-5 in that the latter:

Accepted Answer

A) applies to transfers within 6 months of each other. 
B) only applies to officers, directors and 10% shareholders. 
C) allows injured investors to recover damages on their own behalf. 
D) All of these. 
A) applies to transfers within 6 months of each other. 
B) only applies to officers, directors and 10% shareholders. 
C) allows injured investors to recover damages on their own behalf. 
D) All of these.

Question 11

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

Accepted Answer

A) material. 
B) made with the assumption that it was not false or misleading. 
C) identified as a forward-looking statement and is accompanied by meaningful cautionary statements. 
D) made in connection with an initial public offering or a tender offer. 
A) material. 
B) made with the assumption that it was not false or misleading. 
C) identified as a forward-looking statement and is accompanied by meaningful cautionary statements. 
D) made in connection with an initial public offering or a tender offer.

Question 12

The 1934 Securities Exchange Act requires registration of:

Accepted Answer

A) equity securities of companies traded over the counter whose corporate assets exceed $10 million and whose equity securities include a class with 500 or more shareholders. 
B) stock listed on local stock exchanges. 
C) all stock sold within the U.S. 
D) all domestic stock sold within the U.S. 
A) equity securities of companies traded over the counter whose corporate assets exceed $10 million and whose equity securities include a class with 500 or more shareholders. 
B) stock listed on local stock exchanges. 
C) all stock sold within the U.S. 
D) all domestic stock sold within the U.S.

Question 13

"Restricted securities" are those that are sold pursuant to an exemption from registration.

Accepted Answer

A) True 
 B)False

Question 14

Which of the following is correct about the sanctions and penalties under the 1934 Act, as amended?

Accepted Answer

A) Individuals may not be imprisoned for violation of the 1934 Act. 
B) For individuals, conviction may carry a fine of up to $5 million. 
C) A defendant who proves she was ignorant of a rule can still be imprisoned. 
D) A corporation may be fined not more than $10 million. 
A) Individuals may not be imprisoned for violation of the 1934 Act. 
B) For individuals, conviction may carry a fine of up to $5 million. 
C) A defendant who proves she was ignorant of a rule can still be imprisoned. 
D) A corporation may be fined not more than $10 million.

Question 15

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 organized and doing business 
B) An offering of state securities 
C) An offering of limited partnership interests 
D) A private offering to sophisticated investors who will not redistribute them 
A) An offering restricted to the residents of the state in which the issuing company is organized and doing business 
B) An offering of state securities 
C) An offering of limited partnership interests 
D) A private offering to sophisticated investors who will not redistribute them

Question 16

If a stock offering is made only to "accredited investors," there is no limit on the amount of the offering for the exemption to apply.

Accepted Answer

A) True 
 B)False

Question 17

Under SEC requirements adopted in 2010, disclosure of any directorships held by each director and nominee at any time during the past seven years at any public company or registered investment company must be made to shareholders.

Accepted Answer

A) True 
 B)False

Question 18

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

Accepted Answer

A) government bonds. 
B) securities issued by nonprofit medical facilities. 
C) certificates of deposit issued by banks. 
D) insurance company annuities. 
A) government bonds. 
B) securities issued by nonprofit medical facilities. 
C) certificates of deposit issued by banks. 
D) insurance company annuities.

Question 19

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 dollar amount of $1,500,000.The offering is made to a total of 38 family members and no notice is given to the SEC.Is this a permissible offering under the federal securities laws? Explain.

Accepted Answer

Hugo would probably be able to qualify f

Question 20

The registration statement must be signed by:

Accepted Answer

A) the issuer and the chief financial officer. 
B) the SEC secretary and the chief financial officer. 
C) the chief financial officer only 
D) the SEC secretary only. 
A) the issuer and the chief financial officer. 
B) the SEC secretary and the chief financial officer. 
C) the chief financial officer only 
D) the SEC secretary only.

Exam 43: Securities Regulation

The federal government alone regulates the sale of securities.

The antifraud provisions of the 1933 Act pertain to both unregistered and registered securities.

Which of the following is NOT true about private placement exemptions that do not involve any public offering?

The Securities Enforcement Remedies and Penny Stock Reform Act of 1990 gives the SEC power to issue cease and desist orders and to impose criminal fines up to $1 million.

Which of the following are exemptions for non-issuers?

The 1934 Act applies only to stock traded on a national exchange for companies whose corporate assets exceed $10 million.

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

Bob buys a share of Atlas Pizza, which is unregistered.If it was not exempt from registration, Bob may return the stock and get his money back.

Section 16(b) differs from Rule 10b-5 in that the latter:

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

The 1934 Securities Exchange Act requires registration of:

"Restricted securities" are those that are sold pursuant to an exemption from registration.

Which of the following is correct about the sanctions and penalties under the 1934 Act, as amended?

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

If a stock offering is made only to "accredited investors," there is no limit on the amount of the offering for the exemption to apply.

Under SEC requirements adopted in 2010, disclosure of any directorships held by each director and nominee at any time during the past seven years at any public company or registered investment company must be made to shareholders.

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

The registration statement must be signed by:

Introduction to Law

Business Ethics and the Social Responsibility of Business

Civil Dispute Resolution

Constitutional Law

Administrative Law

Criminal Law

Intentional Torts

Negligence and Strict Liability

Introduction to Contracts

Mutual Assent

Conduct Invalidating Assent

Consideration

Illegal Bargains

Contractual Capacity

Contracts in Writing

Third Parties to Contracts

Performance, Breach, and Discharge

Contract Remedies

Relationship of Principal and Agent

Relationship With Third Parties

Introduction to Sales and Leases

Performance

Transfer of Title and Risk of Loss

Products Liability: Warranties and Strict Liability in Tort

Sales Remedies

Form and Content

Transfer and Holder in Due Course

Liability of Parties

Bank Deposits, Collections, and Funds Transfers

Formation and Internal Relations of General Partnerships

Operation and Dissolution of General Partnerships

Limited Partnerships and Limited Liability Companies

Nature, Formation, and Powers

Financial Structure

Management Structure

Fundamental Changes

Secured Transactions and Suretyship

Bankruptcy

Protection of Intellectual Property

Antitrust

Consumer Protection

Employment Law

Accountants Legal Liability

Environmental Law

International Business Law

Introduction to Property, Property Insurance, Bailments, and Documents of Title

Interests in Real Property

Transfer and Control of Real Property

Trusts and Decedents Estates

51: The Legal Environment Of Business

52: Contracts.

53: Agency.

54: Sales

55: Negotiable Instruments

56: Unincorporated Business Association

57: Corporations

58: Debtor and Creditor Relation

59: Regulation of Business

60: Property.

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