Question 1

All of the following are types of illegal insider trading EXCEPT:

Accepted Answer

A)  officers or directors who pass valuable information to someone who trades in the company's stock and then is repaid in some way. 
B)  an officer or director who makes a direct profit on an investment just after the public announcement of a major development related to that investment. 
C)  a director who buys through overseas financial institutions stocks and options in his own company prior to a public announcement of information which greatly enhances the value of the stock. 
D)  an officer of a company who, for a fee, related to investment bankers information about companies her company is planning to target for takeover. 
A)  officers or directors who pass valuable information to someone who trades in the company's stock and then is repaid in some way. 
B)  an officer or director who makes a direct profit on an investment just after the public announcement of a major development related to that investment. 
C)  a director who buys through overseas financial institutions stocks and options in his own company prior to a public announcement of information which greatly enhances the value of the stock. 
D)  an officer of a company who, for a fee, related to investment bankers information about companies her company is planning to target for takeover. B

Question 2

The Securities Act of 1933 identifies a number of securities exemptions that are, in effect, transaction exemptions.

Accepted Answer

A) True 
 B)False  True

Question 3

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

Question 4

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 5

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

Accepted Answer

A) True 
 B)False

Question 6

Registration under the 1933 Act calls for disclosure of which of the following?

Accepted Answer

A)  A description of the registrant's properties and business. 
B)  A description of the significant provisions of the security to be offered for sale and its relationship to the registrant's other capital securities. 
C)  Compensation paid to directors, the CEO, CFO, and the three other highest paid executive officers. 
D)  All of these. 
A)  A description of the registrant's properties and business. 
B)  A description of the significant provisions of the security to be offered for sale and its relationship to the registrant's other capital securities. 
C)  Compensation paid to directors, the CEO, CFO, and the three other highest paid executive officers. 
D)  All of these.

Question 7

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)  All of these. 
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)  All of these.

Question 8

Which of the following is a basic objective of the 1933 Securities Act?

Accepted Answer

A)  To provide investors with material information concerning securities offered for sale to the public. 
B)  To prohibit misrepresentation, deceit, and other fraudulent acts and unfair practices in the sale of securities generally, whether or not they are required to be registered. 
C)  Both of these. 
D)  Neither of these. 
A)  To provide investors with material information concerning securities offered for sale to the public. 
B)  To prohibit misrepresentation, deceit, and other fraudulent acts and unfair practices in the sale of securities generally, whether or not they are required to be registered. 
C)  Both of these. 
D)  Neither of these.

Question 9

The antifraud provisions of the 1934 Act would prohibit which of the following?

Accepted Answer

A)  Lying about the value of the firm's assets to sell stock. 
B)  Disclosing that the firm has discovered oil on its property in order to sell stock. 
C)  Telling about the bad health of the CEO in a transaction to purchase stock. 
D)  Not disclosing the salaries of secretaries of a large firm whose stock is being sold. 
A)  Lying about the value of the firm's assets to sell stock. 
B)  Disclosing that the firm has discovered oil on its property in order to sell stock. 
C)  Telling about the bad health of the CEO in a transaction to purchase stock. 
D)  Not disclosing the salaries of secretaries of a large firm whose stock is being sold.

Question 10

__________, promulgated by the SEC, provides a nonexclusive safe harbor for securing the intrastate exemption.

Accepted Answer

A)  Rule 506. 
B)  Rule 505. 
C)  Rule 147. 
D)  Rule 504. 
A)  Rule 506. 
B)  Rule 505. 
C)  Rule 147. 
D)  Rule 504.

Question 11

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

Accepted Answer

A) True 
 B)False

Question 12

Shelf registrations allow issuers to register securities that are to be offered and sold on a delayed or continuous basis in the future, but the provision allowing it does not apply to all companies.

Accepted Answer

A) True 
 B)False

Question 13

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. 
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 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

"Restricted securities" are exempted from registration.

Accepted Answer

A) True 
 B)False

Question 16

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 17

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

Accepted Answer

A) True 
 B)False

Question 18

Bonds are included in the definition of the term "security."

Accepted Answer

A) True 
 B)False

Question 19

With few exceptions, an issuer must file preliminary proxy statements and forms with the SEC at least 10 days before they are sent to investors.

Accepted Answer

A) True 
 B)False

Question 20

The Securities Act of 1934 imposes sanctions for noncompliance with its disclosure and antifraud requirements.These sanctions include:

Accepted Answer

A)  civil liability to injured investors and issuers. 
B)  civil penalties. 
C)  criminal penalties. 
D)  All of these. 
A)  civil liability to injured investors and issuers. 
B)  civil penalties. 
C)  criminal penalties. 
D)  All of these.

Exam 39: Securities Regulation

All of the following are types of illegal insider trading EXCEPT:

The Securities Act of 1933 identifies a number of securities exemptions that are, in effect, transaction exemptions.

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

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

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

Registration under the 1933 Act calls for disclosure of which of the following?

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

Which of the following is a basic objective of the 1933 Securities Act?

The antifraud provisions of the 1934 Act would prohibit which of the following?

__________, promulgated by the SEC, provides a nonexclusive safe harbor for securing the intrastate exemption.

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

Shelf registrations allow issuers to register securities that are to be offered and sold on a delayed or continuous basis in the future, but the provision allowing it does not apply to all companies.

Rule 10b-5 applies to any:

Under the 1934 Act, willful violations may result in:

"Restricted securities" are exempted from registration.

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

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

Bonds are included in the definition of the term "security."

With few exceptions, an issuer must file preliminary proxy statements and forms with the SEC at least 10 days before they are sent to investors.

The Securities Act of 1934 imposes sanctions for noncompliance with its disclosure and antifraud requirements.These sanctions include:

Introduction to Law

Business Ethicspart Ii: the Legal Environment of Business

Civil Dispute Resolution

Constitutional Law

Administrative Law

Criminal Law

Negligence and Strict Liabilitypart Iii: Contracts

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 Remediespart Iv: Sales

Introduction to Sales and Leases

Performance

Transfer of Title and Risk of Loss

Product Liability: Warranties and Strict Liability

Sales Remediespart V: Negotiable Instruments

Form and Content

Transfer and Holder in Due Course

Liability of Parties

Bank Deposits, Collections, and Funds Transferspart Vi: Agency

Relationship of Principal and Agent

Relationship With Third Partiespart Vii: Business Associations

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 Corporationspart Viii: Debtor and Creditor Relations

Secured Transactions and Suretyship

Bankruptcypart Ix: Regulation of Business

Intellectual Property

Employment Law

Antitrust

Accountants Legal Liability

Consumer Protection

International Business Lawpart X: Property

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

Interests in Real Property

Transfer and Control of Real Property

Trusts and Wills

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