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Exam 31: Investor Protection, Insider Trading, Corp Gov

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Question 31

True/False

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State securities laws apply mainly to intrastate transactions.

A) True
B) False

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Question 32

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Readmore Bookstore Corporation files a registration statement with the Securities and Exchange Commission and provides a prospectus describing the securities to investors. These items are intended to provide sufficient information so that the financial risks involved can be evaluated by

A) market professionals to explain to all investors.
B) government regulators to disclose to the general public.
C) sophisticated investors only.
D) unsophisticated investors.

E) A) and D)
F) A) and B)

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Question 33

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Fact Pattern 31-3 Dhani, an accountant for Eureka, Inc., learns of undisclosed company plans to market a new laptop. Dhani buys 1,000 shares of Eureka stock. He reveals the company plans to Fay, who buys 500 shares. Fay tells Geoff, who tells Hu. Both Geoff and Hu buy 100 shares. They know that Fay got her information from Dhani. When Eureka publicly announces its new laptop, Dhani, Fay, Geoff, and Hu sell their stock for a profit. -Refer to Fact Pattern 31-3. Under the Securities Exchange Act of 1934, Fay is most likely

One of the most common forms of securities are bonds issued by corporations.

Any corporation with less than $10 million in assets and fewer than five hundred shareholders must register their securities with the Securities and Exchange Commission.

"Blue sky laws" regulate securities data stored in cloud computing servers.

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

Fact Pattern 31-1 Fresh Cream, Inc., wants to make an initial public offering of securities. Fresh believes that it qualifies for an exemption under Regulation A from the full registration requirement of the federal Securities Act of 1933. -Refer to Fact Pattern 31-1. If Fresh is exempt from the federal registration requirement, Fresh is

Corporations' chief executive officers are directly accountable for the accuracy of financial statements filed with the Securities and Exchange Commission.

Fact Pattern 31-2 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 31-2. Under SEC Rule l0b-5, Sid would not be liable if he had waited to buy Tech stock until

Willful violations of the Sarbanes-Oxley Act of 2002 may be subject to harsh penalties.

Before filing a registration statement, an issuer must offer to sell securities.

Dee, an accountant, does not work for Emergent Company, but wrongfully obtains inside information concerning Emergent. Based on the information, Dee buys and sells Emergent stock for personal gain. The Securities and Exchange Commission prosecutes Dee, arguing that she is liable because she stole information rightfully belonging to another. This argument is

Madison is the chief executive officer of Nitro Medico, Inc., which is required to file certain financial reports with the Securities and Exchange Commission (SEC) . Under the Sarbanes-Oxley Act of 2002, Madison must

The Securities Exchange Act of 1934 provides for continuous, periodic disclosures by publicly held corporations.

Global Investments Corporation buys and sells securities. Section 10(b) of 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 six-month period.

Players Video Game Centers, Inc., wants to issue stock of $1 million in a single offering. Players must provide all investors with material information about itself, its business, and its securities if

Corporate governance can be defined as the relationship between a corporation and its directors.

Fact Pattern 31-1 Fresh Cream, Inc., wants to make an initial public offering of securities. Fresh believes that it qualifies for an exemption under Regulation A from the full registration requirement of the federal Securities Act of 1933. -Refer to Fact Pattern 31-1. Fresh decides to sell its new securities via the Internet. This offering