Question 1

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 these are true. 
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 these are true. C

Question 2

A solicitation of proxies from holders of stock:

Accepted Answer

A)  is comprehensively regulated by the SEC. 
B)  includes a request for a proxy, but not a request to revoke a proxy. 
C)  gives any security holder entitled to vote the opportunity to communicate with other security holders. Upon written request, the corporation must mail the communication at the corporation's expense along with the solicitation. 
D)  is required for any vote that involves money or issuance of shares. 
A)  is comprehensively regulated by the SEC. 
B)  includes a request for a proxy, but not a request to revoke a proxy. 
C)  gives any security holder entitled to vote the opportunity to communicate with other security holders. Upon written request, the corporation must mail the communication at the corporation's expense along with the solicitation. 
D)  is required for any vote that involves money or issuance of shares. A

Question 3

Dryler Corporation sold unregistered securities that were required under the 1933 Act to be registered. Howlett-Midland Corporation used an outdated prospectus in the sale of its securities. Discuss the civil liability of the companies for these acts.

Accepted Answer

Section 12(a)(1) of the 1933 Act imposes express civil liability for the sale of an unregistered security that is required to be registered, the sale of a registered security without delivery of a prospectus, the sale of a security by use of an outdated prospectus, or the offer of a sale before the filing of the registration statement. Liability is strict or absolute, because there are no defenses. The person who purchases a security sold in violation of this provision has the right to tender it back to the seller and recover the purchase price. If the purchaser no longer owns the security, he may recover monetary damages from the seller.

Question 4

The issuer of a registration statement has strict liability for its accuracy.

Accepted Answer

A) True 
 B)False

Question 5

The Securities Act of 1933 regulates tender offers and proxy solicitations.

Accepted Answer

A) True 
 B)False

Question 6

EDGAR is the computer system established by the SEC to perform automated collection, validation, and dissemination of required reports.

Accepted Answer

A) True 
 B)False

Question 7

The registration requirement of the 1934 Act pertains to the entire class of securities rather than to a specific offering.

Accepted Answer

A) True 
 B)False

Question 8

As amended in 1999 and 2017, SEC Rule 504 provides private, noninvestment company issuers with an exemption from registration for issues not exceeding $5 million within twelve months.

Accepted Answer

A) True 
 B)False

Question 9

The 1934 Act rules governing proxy solicitations would require a proxy statement describing the material facts relating to items to be voted upon.

Accepted Answer

A) True 
 B)False

Question 10

Only civil liability may be imposed for violations of the Securities Act of 1933.

Accepted Answer

A) True 
 B)False

Question 11

SEC regulations concerning fraud in securities transactions apply to:

Accepted Answer

A)  all securities transactions involving interstate commerce. 
B)  only securities registered under the 1934 Act. 
C)  only securities registered under the 1933 Act. 
D)  securities registered under both the 1933 and 1934 Acts. 
A)  all securities transactions involving interstate commerce. 
B)  only securities registered under the 1934 Act. 
C)  only securities registered under the 1933 Act. 
D)  securities registered under both the 1933 and 1934 Acts.

Question 12

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 13

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

Accepted Answer

A) True 
 B)False

Question 14

Under the 1934 Act, willful violations may result in:

Accepted Answer

A)  a fine of up to $10 million for an individual. 
B)  imprisonment of up to no more than ten years. 
C)  a fine of up to $25 million for a corporation. 
D)  All of these. 
A)  a fine of up to $10 million for an individual. 
B)  imprisonment of up to no more than ten years. 
C)  a fine of up to $25 million for a corporation. 
D)  All of these.

Question 15

Section 11 of the Securities Act of 1933 imposes liability on:

Accepted Answer

A)  the issuer. 
B)  all persons who signed the registration statement. 
C)  every director or partner, and all underwriters. 
D)  All of these. 
A)  the issuer. 
B)  all persons who signed the registration statement. 
C)  every director or partner, and all underwriters. 
D)  All of these.

Question 16

Willful violations of the Securities Act of 1933 are subject to a fine of not more than __________ and/or imprisonment of not more than __________ or both.

Accepted Answer

A)  $5,000, one year. 
B)  $10,000, five years. 
C)  $100,000, five years. 
D)  $250,000, ten years. 
A)  $5,000, one year. 
B)  $10,000, five years. 
C)  $100,000, five years. 
D)  $250,000, ten years.

Question 17

The SEC may not advance the effective date of a registration statement.

Accepted Answer

A) True 
 B)False

Question 18

The civil penalty for a person who trades on inside information:

Accepted Answer

A)  is payable into the U.S. Treasury. 
B)  must be imposed as a result of an action brought within three years after the date of the purchase or sale. 
C)  is, for a controlling person, up to the greater of $1 million or two times the profit gained or loss avoided as a result of the controlled person's violation. 
D)  is determined by the board of directors of the injured corporation. 
A)  is payable into the U.S. Treasury. 
B)  must be imposed as a result of an action brought within three years after the date of the purchase or sale. 
C)  is, for a controlling person, up to the greater of $1 million or two times the profit gained or loss avoided as a result of the controlled person's violation. 
D)  is determined by the board of directors of the injured corporation.

Question 19

A registration statement generally includes all of the following EXCEPT a:

Accepted Answer

A)  financial statement certified by an independent public accountant. 
B)  description of the business. 
C)  description of the management. 
D)  projection of future growth potential. 
A)  financial statement certified by an independent public accountant. 
B)  description of the business. 
C)  description of the management. 
D)  projection of future growth potential.

Question 20

The Securities Enforcement Remedies and Penny Stock Reform Act of 1990 granted the SEC the power to impose administrative, civil penalties up to the current inflation-adjusted amount of $725,000.

Accepted Answer

A) True 
 B)False

Exam 39: Securities Regulation

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

A solicitation of proxies from holders of stock:

Dryler Corporation sold unregistered securities that were required under the 1933 Act to be registered. Howlett-Midland Corporation used an outdated prospectus in the sale of its securities. Discuss the civil liability of the companies for these acts.

The issuer of a registration statement has strict liability for its accuracy.

The Securities Act of 1933 regulates tender offers and proxy solicitations.

EDGAR is the computer system established by the SEC to perform automated collection, validation, and dissemination of required reports.

The registration requirement of the 1934 Act pertains to the entire class of securities rather than to a specific offering.

As amended in 1999 and 2017, SEC Rule 504 provides private, noninvestment company issuers with an exemption from registration for issues not exceeding $5 million within twelve months.

The 1934 Act rules governing proxy solicitations would require a proxy statement describing the material facts relating to items to be voted upon.

Only civil liability may be imposed for violations of the Securities Act of 1933.

SEC regulations concerning fraud in securities transactions apply to:

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.

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

Under the 1934 Act, willful violations may result in:

Section 11 of the Securities Act of 1933 imposes liability on:

Willful violations of the Securities Act of 1933 are subject to a fine of not more than __________ and/or imprisonment of not more than __________ or both.

The SEC may not advance the effective date of a registration statement.

The civil penalty for a person who trades on inside information:

A registration statement generally includes all of the following EXCEPT a:

The Securities Enforcement Remedies and Penny Stock Reform Act of 1990 granted the SEC the power to impose administrative, civil penalties up to the current inflation-adjusted amount of $725,000.

Introduction to Law

Business Ethics

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

Introduction to Sales and Leases

Performance

Transfer of Title and Risk of Loss

Product Liability Warranties and Strict Liability

Sales Remedies

Form and Content

Transfer and Holder in Due Course

Liability of Parties

Bank Deposits Collections and Funds Transfers

Relationship of Principal and Agent

Relationship With Third Parties

Formation and Internal Relations of General Partnerships

Operation and Dissolution of General Partnerships

Limited Partnerships and Limited Liability Companies

Nature and Formation of Corporations

Financial Structure of Corporations

Management Structure of Corporations

Fundamental Changes of Corporations

Secured Transactions and Suretyship

Bankruptcy

Intellectual Property

Employment Law

Antitrust

Accountants Legal Liability

Consumer Protection

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 Wills

Filters

Willful violations of the Securities Act of 1933 are subject to a fine of not more than and/or imprisonment of not more than or both.