Question 1

The Securities Enforcement Remedies and Penny Stock Reform Act of 1990 granted the SEC power to:

Accepted Answer

A)  issue cease-and-desist orders. 
B)  impose civil penalties up to $850,000. 
C)  bring civil actions for specified violations of the 1934 Act against aiders and abettors. 
D)  All of these. 
A)  issue cease-and-desist orders. 
B)  impose civil penalties up to $850,000. 
C)  bring civil actions for specified violations of the 1934 Act against aiders and abettors. 
D)  All of these. A

Question 2

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

Accepted Answer

A) True 
 B)False  False

Question 3

A "private placement" involves no public offering and is exempt from registration.

Accepted Answer

A) True 
 B)False  True

Question 4

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 5

Which of the following is NOT a purpose of federal securities regulation?

Accepted Answer

A)  To ensure that only worthwhile securities are sold in interstate commerce. 
B)  To ensure adequate disclosure by issuers of securities. 
C)  To ensure that inside information is not abused. 
D)  To prevent the use of fraud in the marketing of securities. 
A)  To ensure that only worthwhile securities are sold in interstate commerce. 
B)  To ensure adequate disclosure by issuers of securities. 
C)  To ensure that inside information is not abused. 
D)  To prevent the use of fraud in the marketing of securities.

Question 6

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 7

Every registration filed with the SEC is held in confidence until the business permits disclosure.

Accepted Answer

A) True 
 B)False

Question 8

The Dodd-Frank Act amends the 1933 and 1934 Acts to require knowledge as the mental state required for the SEC to bring aiding and abetting cases.

Accepted Answer

A) True 
 B)False

Question 9

Solicitation includes any request:

Accepted Answer

A)  for a proxy. 
B)  not to execute a proxy. 
C)  to revoke a proxy. 
D)  All of these. 
A)  for a proxy. 
B)  not to execute a proxy. 
C)  to revoke a proxy. 
D)  All of these.

Question 10

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 11

The Reform Act's safe harbor under the 1933 Act eliminates civil liability based on an untrue statement or omission if a forward-looking statement is:

Accepted Answer

A)  material. 
B)  made without actual knowledge that it was false or misleading. 
C)  unidentified as a forward-looking statement 
D)  All of these. 
A)  material. 
B)  made without actual knowledge that it was false or misleading. 
C)  unidentified as a forward-looking statement 
D)  All of these.

Question 12

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

Accepted Answer

A) True 
 B)False

Question 13

SEC Rule 10b5-2 adopts what theory of liability?

Accepted Answer

A)  Misappropriation. 
B)  Strict. 
C)  Negligence. 
D)  Criminal. 
A)  Misappropriation. 
B)  Strict. 
C)  Negligence. 
D)  Criminal.

Question 14

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

Accepted Answer

A) True 
 B)False

Question 15

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

Accepted Answer

A) True 
 B)False

Question 16

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? Explain.

Accepted Answer

Hugo would probably be able to qualify f

Question 17

The Securities Enforcement Remedies and Penny Stock Reform Act of 1990 granted the SEC the power to issue cease and desist orders and to impose civil penalties.

Accepted Answer

A) True 
 B)False

Question 18

The Securities Act of 1933 has two basic objectives, one of which is to:

Accepted Answer

A)  extend protection to investors trading in outstanding, issued securities. 
B)  grant the SEC power to impose administrative, civil penalties up to $600,000. 
C)  regulate disclosure requirements on publicly held corporations. 
D)  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. 
A)  extend protection to investors trading in outstanding, issued securities. 
B)  grant the SEC power to impose administrative, civil penalties up to $600,000. 
C)  regulate disclosure requirements on publicly held corporations. 
D)  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.

Question 19

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.

Question 20

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. 
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.

Exam 39: Securities Regulation

The Securities Enforcement Remedies and Penny Stock Reform Act of 1990 granted the SEC power to:

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

A "private placement" involves no public offering and is exempt from registration.

Under the 1934 Act, willful violations may result in:

Which of the following is NOT a purpose of federal securities regulation?

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.

Every registration filed with the SEC is held in confidence until the business permits disclosure.

The Dodd-Frank Act amends the 1933 and 1934 Acts to require knowledge as the mental state required for the SEC to bring aiding and abetting cases.

Solicitation includes any request:

Rule 10b-5 applies to any:

The Reform Act's safe harbor under the 1933 Act eliminates civil liability based on an untrue statement or omission if a forward-looking statement is:

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

SEC Rule 10b5-2 adopts what theory of liability?

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

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

The Securities Enforcement Remedies and Penny Stock Reform Act of 1990 granted the SEC the power to issue cease and desist orders and to impose civil penalties.

The Securities Act of 1933 has two basic objectives, one of which is to:

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

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

Introduction to Law

Business Ethics

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Constitutional Law

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Intentional Torts

Negligence and Strict Liability

Introduction to Contracts

Mutual Assent

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