Question 1

What information must be contained in a registration statement?

Accepted Answer

A registration statement must include (1)detailed information about the issuer and its business,(2)a description of the stock,(3)the proposed use of the proceeds from the offering,and (4)audited balance sheets and income statements.The amount of required disclosure depends on the issuer.More disclosure is required for an IPO than for an offering by a "well-known seasoned issuer."

Question 2

The Sarbanes-Oxley Act makes it a crime to retaliate against someone who blows the whistle on any federal offense.

Accepted Answer

A) True 
 B)False  True

Question 3

MegaCorp wishes to sell $25 million of securities.The only investors will be 20 institutional buyers.Which of the following applies to this offering?

Accepted Answer

A)  Rule 504 of Regulation D of the 1933 Act. 
B)  Rule 505 of Regulation D of the 1933 Act. 
C)  Rule 506 of Regulation D of the 1933 Act. 
D)  None of the above apply to this $25 million offering. 
A)  Rule 504 of Regulation D of the 1933 Act. 
B)  Rule 505 of Regulation D of the 1933 Act. 
C)  Rule 506 of Regulation D of the 1933 Act. 
D)  None of the above apply to this $25 million offering. C

Question 4

The 1934 Act requires companies with a class of stock that is publicly traded to make regular filings with the SEC.

Accepted Answer

A) True 
 B)False

Question 5

The SEC creates law in all but which of the following ways?

Accepted Answer

A)  Bringing cease and desist orders. 
B)  Issuing releases. 
C)  Promulgating rules. 
D)  Writing no-action letters. 
A)  Bringing cease and desist orders. 
B)  Issuing releases. 
C)  Promulgating rules. 
D)  Writing no-action letters.

Question 6

An individual engaged in illegal insider trading could be:

Accepted Answer

A)  fined. 
B)  given a prison sentence. 
C)  required to pay the SEC three times the profit made. 
D)  All the above are correct. 
A)  fined. 
B)  given a prison sentence. 
C)  required to pay the SEC three times the profit made. 
D)  All the above are correct.

Question 7

Which of the following statements is correct?

Accepted Answer

A)  Investors generally receive a copy of the registration statement. 
B)  Investors generally do not receive the company's prospectus. 
C)  A prospectus provides disclosure about the offering but does not include as much information as the registration statement, such as information that would be of interest to the SEC but not the typical investor. 
D)  All the above. 
A)  Investors generally receive a copy of the registration statement. 
B)  Investors generally do not receive the company's prospectus. 
C)  A prospectus provides disclosure about the offering but does not include as much information as the registration statement, such as information that would be of interest to the SEC but not the typical investor. 
D)  All the above.

Question 8

Under which of the following exemptions is there no dollar limitation?

Accepted Answer

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

Question 9

The 1933 Act exempts all but which of the following from its registration requirements?

Accepted Answer

A)  Short-term notes. 
B)  Treasury stock. 
C)  Government securities. 
D)  Annuity contracts. 
A)  Short-term notes. 
B)  Treasury stock. 
C)  Government securities. 
D)  Annuity contracts.

Question 10

Under the 1934 Act,an issuer must register with the SEC if:

Accepted Answer

A)  it completes a public offering under the 1933 Act. 
B)  its securities are traded on a national exchange. 
C)  it has at least 500 shareholdres and total assets that exceed $10 million. 
D)  All of the above. 
A)  it completes a public offering under the 1933 Act. 
B)  its securities are traded on a national exchange. 
C)  it has at least 500 shareholdres and total assets that exceed $10 million. 
D)  All of the above.

Question 11

To recover for an alleged violation of SEC Rule 10(b)-5,a plaintiff is required to prove reliance on a misstatement or omission relative to the purchase of the security.

Accepted Answer

A) True 
 B)False

Question 12

What are the three primary ways the SEC creates law?

Accepted Answer

The SEC creates law by (1)issu

Question 13

Section 16 of the 1934 Act prohibits short-swing trading on the part of any person who is:

Accepted Answer

A)  an officer of a corporation. 
B)  a director of a corporation. 
C)  any shareholder who owns ten percent or more of the corporate stock. 
D)  All the above. 
A)  an officer of a corporation. 
B)  a director of a corporation. 
C)  any shareholder who owns ten percent or more of the corporate stock. 
D)  All the above.

Question 14

The 1933 Act prohibits fraud only in transactions involving registered securities.

Accepted Answer

A) True 
 B)False

Question 15

Which of the following requires companies to file annual reports containing audited financial statements?

Accepted Answer

A)  The 1933 Act. 
B)  The 1934 Act. 
C)  Regulation A. 
D)  Regulation B. 
A)  The 1933 Act. 
B)  The 1934 Act. 
C)  Regulation A. 
D)  Regulation B.

Question 16

The Foreign Corrupt Practices Act:

Accepted Answer

A)  applies only to corporations registered under the federal Securities Exchange Act. 
B)  makes it illegal to bribe U.S. and foreign officials. 
C)  applies to any U.S. corporations. 
D)  applies only to foreign corporations. 
A)  applies only to corporations registered under the federal Securities Exchange Act. 
B)  makes it illegal to bribe U.S. and foreign officials. 
C)  applies to any U.S. corporations. 
D)  applies only to foreign corporations.

Question 17

The 1934 Act is primarily intended to:

Accepted Answer

A)  maintain the integrity of the secondary market for securities. 
B)  make sure companies who wish to raise money by the sale of securities comply with disclosure requirements for the initial offering. 
C)  coordinate federal and state laws with a primary emphasis on allowing the individual states to maintain primary control over securities law. 
D)  All the above are correct. 
A)  maintain the integrity of the secondary market for securities. 
B)  make sure companies who wish to raise money by the sale of securities comply with disclosure requirements for the initial offering. 
C)  coordinate federal and state laws with a primary emphasis on allowing the individual states to maintain primary control over securities law. 
D)  All the above are correct.

Question 18

The "tipper" of inside information can be convicted of a crime,the "tippee" cannot.

Accepted Answer

A) True 
 B)False

Question 19

Offerings under Regulation A of the Securities Act of 1933,although called private offerings,are really small public offerings.

Accepted Answer

A) True 
 B)False

Question 20

The SEC has enforcement powers,including the power to issue cease and desist orders,to levy fines,and to confiscate profits from illegal transactions.

Accepted Answer

A) True 
 B)False

Exam 36: Securities Regulation

What information must be contained in a registration statement?

The Sarbanes-Oxley Act makes it a crime to retaliate against someone who blows the whistle on any federal offense.

MegaCorp wishes to sell $25 million of securities.The only investors will be 20 institutional buyers.Which of the following applies to this offering?

The 1934 Act requires companies with a class of stock that is publicly traded to make regular filings with the SEC.

The SEC creates law in all but which of the following ways?

An individual engaged in illegal insider trading could be:

Which of the following statements is correct?

Under which of the following exemptions is there no dollar limitation?

The 1933 Act exempts all but which of the following from its registration requirements?

Under the 1934 Act,an issuer must register with the SEC if:

To recover for an alleged violation of SEC Rule 10(b)-5,a plaintiff is required to prove reliance on a misstatement or omission relative to the purchase of the security.

What are the three primary ways the SEC creates law?

Section 16 of the 1934 Act prohibits short-swing trading on the part of any person who is:

The 1933 Act prohibits fraud only in transactions involving registered securities.

Which of the following requires companies to file annual reports containing audited financial statements?

The Foreign Corrupt Practices Act:

The 1934 Act is primarily intended to:

The "tipper" of inside information can be convicted of a crime,the "tippee" cannot.

Offerings under Regulation A of the Securities Act of 1933,although called private offerings,are really small public offerings.

The SEC has enforcement powers,including the power to issue cease and desist orders,to levy fines,and to confiscate profits from illegal transactions.

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