Exam 27: Investor Protection, insider Trading, Corpgov

Fact Pattern 27-1 Sid,a director of Tech Software Company,learns that a Tech engineer has developed a new,exciting video game.Sid buys Tech stock and tells his friend Uri,who also buys Tech stock.When the new game is released three weeks later,Sid and Uri sell their stock for a big profit. -Refer to Fact Pattern 27-1.Under SEC Rule l0b-5,Sid would not be li?able if he had waited to buy Tech stock until

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Question 1

Correct Answer:

Verified

When Looking Glass Corporation wishes to issue certain securities,it must provide sufficient in?for?mation for Alice,and other unsophisticated investors,to evaluate the fi?nancial risk involved.Specifically,the law imposes liability for making a false statement or omission that is "material." What sort of information would Alice consider material?

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Question 2

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Most likely,Alice,and any other average unsophisticated investor,is not con?cerned with mi?nor inaccura?cies but with facts that if disclosed would tend to deter her from buying the se?curities.This would include facts that have an important bearing on the con?dition of the issuer and its busi?ness-fraud,a divi?dend change,a significant change in the firm's financial condition,and a new discovery,process,or product,as well as its li?ability,loans to offi?cers and directors,cus?tomer delinquencies,and pending lawsuits.Making false statements or omissions with respect to this type of infor?ma?tion could subject a corporation to liability under the securities laws.

Section 10(b)of the Securities Exchange Act of 1934 covers only corpo?rate officers and di?rectors.

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(True/False)

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Question 3

Correct Answer:

Verified

False

Securities that are exempt from the registration requirement can generally be sold and resold without being registered.

(True/False)

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Question 4

Fresh Seasonal Fruit Company has assets of less than $10 million and fewer than fifty shareholders.Gourmand Pastries,Inc. ,has assets of more than $50 mil?lion and more than five hundred shareholders.The Securities Exchange Act of 1934 applies to

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Question 5

A corporation can recapture any profits realized by an insider on any purchase or sale of the firm's stock within any twelve-month period.

(True/False)

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Question 6

Willful violations of the Sarbanes-Oxley Act of 2002 may be subject to criminal prosecution.

(True/False)

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Question 7

Flux Corporation is a public company whose shares are traded in the public securities markets.Under the Sarbanes-Oxley Act of 2002,Flux is subject to the direct corporate governance requirements of

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Question 8

Willful violations of the Securities Act of 1933 may be subject to criminal prosecution.

(True/False)

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Question 9

Any corporation with more than $10 million in assets and five hundred or more shareholders must register with the Securi?ties and Exchange Commission.

(True/False)

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Question 10

The key to liability under Section 10(b)of the Securities Exchange Act of 1934 and SEC Rule 10b-5 is whether undisclosed inside information is material.

(True/False)

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Question 11

Riley,an engineer for Shur-2-Gro Seed Corporation,learns that Shur-2-Gro has developed a corn hybrid to triple the output of any farm.Riley buys 20,000 shares of Shur-2-Gro stock.He tells Tess,who buys 15,000 shares.After the new hybrid is announced publicly,the price of Shur-2-Gro stock in?creases.Riley and Tess sell their shares for a profit.Under the Securities Exchange Act of 1934,liability may be imposed on

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Question 12

Fact Pattern 27-1 Sid,a director of Tech Software Company,learns that a Tech engineer has developed a new,exciting video game.Sid buys Tech stock and tells his friend Uri,who also buys Tech stock.When the new game is released three weeks later,Sid and Uri sell their stock for a big profit. -Refer to Fact Pattern 27-1.Regarding Sid's profits on the purchase and sale of Tech stock,under Section 16(b)of the Securities Exchange Act of 1934 Tech may recapture

(Multiple Choice)

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Question 13

Bild-It-Rite Corporation is a public company that is preparing to issue securities that do not qualify for an exemption from registration.This means that Bild-It-Rite must

(Multiple Choice)

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Question 14

State securities laws apply only to interstate transactions.

(True/False)

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Question 15

SEC Rule 10b-5 prohibits the commission of fraud in connection with the purchase or sale of any security

(True/False)

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Question 16

Only outsiders who would ordinarily be deemed fiduciaries of the corporations in whose stock they trade can be liable for insider trading.

(True/False)

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Question 17

Hobie,the chief executive officer of Ideal Gamers,Inc.(IGI),inten?tionally understates the amount of IGI's debts in information provided to investors as part of an issue of IGI stock.Jaq buys the stock and suffers a loss.Hobie may be subject to

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Question 18

Della,an officer for Energy Petrol Corporation (EPC),buys 100 shares of EPC stock.One week later,EPC announces that it will merge with a competitor,Fuel Oil Company,and the price of EPC stock increases.One month later,Della sells her shares for a profit.Under Section 16(b)of the Securities Exchange Act of 1934,Della would not be liable if,after buying the stock,she had waited

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Question 19

Private offerings of securities in unlimited amounts can never be exempt from the registration requirement of the Securities Act of 1933.

(True/False)

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Question 20

Showing 1 - 20 of 72

Exam 27: Investor Protection, insider Trading, Corpgov

Section 10(b)of the Securities Exchange Act of 1934 covers only corpo?rate officers and di?rectors.

Securities that are exempt from the registration requirement can generally be sold and resold without being registered.

Fresh Seasonal Fruit Company has assets of less than $10 million and fewer than fifty shareholders.Gourmand Pastries,Inc. ,has assets of more than $50 mil?lion and more than five hundred shareholders.The Securities Exchange Act of 1934 applies to

A corporation can recapture any profits realized by an insider on any purchase or sale of the firm's stock within any twelve-month period.

Willful violations of the Sarbanes-Oxley Act of 2002 may be subject to criminal prosecution.

Flux Corporation is a public company whose shares are traded in the public securities markets.Under the Sarbanes-Oxley Act of 2002,Flux is subject to the direct corporate governance requirements of

Willful violations of the Securities Act of 1933 may be subject to criminal prosecution.

Any corporation with more than $10 million in assets and five hundred or more shareholders must register with the Securi?ties and Exchange Commission.

The key to liability under Section 10(b)of the Securities Exchange Act of 1934 and SEC Rule 10b-5 is whether undisclosed inside information is material.

Bild-It-Rite Corporation is a public company that is preparing to issue securities that do not qualify for an exemption from registration.This means that Bild-It-Rite must

State securities laws apply only to interstate transactions.

SEC Rule 10b-5 prohibits the commission of fraud in connection with the purchase or sale of any security

Only outsiders who would ordinarily be deemed fiduciaries of the corporations in whose stock they trade can be liable for insider trading.

Hobie,the chief executive officer of Ideal Gamers,Inc.(IGI),inten?tionally understates the amount of IGI's debts in information provided to investors as part of an issue of IGI stock.Jaq buys the stock and suffers a loss.Hobie may be subject to

Private offerings of securities in unlimited amounts can never be exempt from the registration requirement of the Securities Act of 1933.

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