Question 1

It is legal for a company employee to make a profit by personally purchasing shares of the corporation prior to public release of favorable information.

Accepted Answer

A) True 
 B)False

Question 2

The Securities Act of 1933 regulates the purchase and sale of securities online.

Accepted Answer

A) True 
 B)False

Question 3

In order to be found guilty for violation of Rule 10b-5, intentional conduct (scienter)must be proven.

Accepted Answer

A) True 
 B)False

Question 4

An investor who has purchased an unregistered security can rescind their purchase, but not recover damages.

Accepted Answer

A) True 
 B)False

Question 5

Interests in oil, gas, and mineral rights are considered statutorily defined securities.

Accepted Answer

A) True 
 B)False

Question 6

________ requires that any profits made by a statutory insider on transactions involving short-swing profits belong to the corporation.

Accepted Answer

A)  Section 5 of the Securities Act of 1933
B)  Section 12 of the Securities Act of 1933
C)  Section 16(b) of the Securities Exchange Act of 1934
D)  SEC Rule 10b5-1E) None of the above
F) All of the above

Question 7

The issuer is permitted to assert a due diligence defense against the imposition of Section 11 liability.

Accepted Answer

A) True 
 B)False

Question 8

A(n) ________ is a flexible standard for defining a security.

Accepted Answer

A)  red herring prospectus
B)  investment contract
C)  certificate of interest
D)  debentureE) C) and D)
F) A) and B)

Question 9

What is insider trading? How is it regulated in the U.S.A?

Accepted Answer

Insider trading occurs when a company em...

Question 10

Which of the following is enough to prove a violation of Section 10(b) and Rule 10b-5?

Accepted Answer

A)  nonexemption status
B)  scienter
C)  aiding and abetting
D)  negligent conductE) None of the above
F) A) and B)

Question 11

An offering statement requires less disclosure compared to a registration statement.

Accepted Answer

A) True 
 B)False

Question 12

Which of the following is true of Section 11 of the Securities Act of 1933?

Accepted Answer

A)  It permits injured private parties to bring criminal action against fraudulent registration statements filed by issuers.
B)  It imposes liability on those who are negligent in not discovering the fraud.
C)  It allows an issuer to assert a due diligence defense against the imposition of Section 11 liability.
D)  It cannot be imposed on cases involving negligent omission of a material fact in a registration statement.E) A) and B)
F) A) and C)

Question 13

Blue-sky laws are state laws that regulate the issuance and trading of securities.

Accepted Answer

A) True 
 B)False

Question 14

The ________ is a federal statute that permits the SEC to obtain a civil penalty of up to three times the illegal benefits received from insider trading.

Accepted Answer

A)  Securities Act
B)  Securities Exchange Act
C)  Insider Trading Sanctions Act
D)  SEC Rule 506E) A) and D)
F) B) and C)

Question 15

________ permits issuers to sell up to $5 million of securities to the public during a 12-month period, pursuant to a simplified registration process.

Accepted Answer

A)  SEC Rule 506
B)  Section 12 of the Securities Act of 1933
C)  Section 5 of the Securities Act of 1934
D)  Regulation AE) All of the above
F) A) and B)

Question 16

Defendants cannot assert a due diligence defense against liabilities arising from the violation of Section 11 of the Securities Act of 1933.

Accepted Answer

A) True 
 B)False

Question 17

List the securities exempt from registration with the SEC.

Accepted Answer

Certain securities are exempt from regis...

Question 18

Which of the following is true of Small Company Offering Registration (SCOR) form?

Accepted Answer

A)  SCOR forms can only be used for raising more than $1 million through sale of securities.
B)  SCOR forms are available to both domestic and foreign companies.
C)  SCOR forms that have been completed act as the offering circular for potential investors.
D)  SCOR forms have to be completed by the issuee before purchasing securities.E) B) and D)
F) B) and C)

Question 19

Distinguish between nonissuer exemption, intrastate offering exemption, and private placement exemption.

Accepted Answer

Nonissuer exemption refers to an exempti...

Question 20

A registration statement need not contain details on how the proceeds from the offering will be used.

Accepted Answer

A) True 
 B)False

Exam 41: Investor Protection, E-Securities, and Wall Street Reform

An offering statement requires less disclosure compared to a registration statement.

Correct AnswerverifiedShow Answer

________ requires that any profits made by a statutory insider on transactions involving short-swing profits belong to the corporation.

Correct AnswerverifiedShow Answer

What is insider trading? How is it regulated in the U.S.A?

Correct AnswerverifiedInsider trading occurs when a company em...View AnswerShow Answer

It is legal for a company employee to make a profit by personally purchasing shares of the corporation prior to public release of favorable information.

Correct AnswerverifiedShow Answer

________ permits issuers to sell up to $5 million of securities to the public during a 12-month period, pursuant to a simplified registration process.

Correct AnswerverifiedShow Answer

Blue-sky laws are state laws that regulate the issuance and trading of securities.

Correct AnswerverifiedShow Answer

A registration statement need not contain details on how the proceeds from the offering will be used.

Correct AnswerverifiedShow Answer

Defendants cannot assert a due diligence defense against liabilities arising from the violation of Section 11 of the Securities Act of 1933.

Correct AnswerverifiedShow Answer

Which of the following is true of Section 11 of the Securities Act of 1933?

Correct AnswerverifiedShow Answer

Interests in oil, gas, and mineral rights are considered statutorily defined securities.

Correct AnswerverifiedShow Answer

Distinguish between nonissuer exemption, intrastate offering exemption, and private placement exemption.

Correct AnswerverifiedNonissuer exemption refers to an exempti...View AnswerShow Answer

Which of the following is true of Small Company Offering Registration (SCOR) form?

Correct AnswerverifiedShow Answer

List the securities exempt from registration with the SEC.

Correct AnswerverifiedCertain securities are exempt from regis...View AnswerShow Answer

A(n) ________ is a flexible standard for defining a security.

Correct AnswerverifiedShow Answer

In order to be found guilty for violation of Rule 10b-5, intentional conduct (scienter)must be proven.

Correct AnswerverifiedShow Answer

The Securities Act of 1933 regulates the purchase and sale of securities online.

Correct AnswerverifiedShow Answer

Which of the following is enough to prove a violation of Section 10(b) and Rule 10b-5?

Correct AnswerverifiedShow Answer

The issuer is permitted to assert a due diligence defense against the imposition of Section 11 liability.

Correct AnswerverifiedShow Answer

The ________ is a federal statute that permits the SEC to obtain a civil penalty of up to three times the illegal benefits received from insider trading.

Correct AnswerverifiedShow Answer

An investor who has purchased an unregistered security can rescind their purchase, but not recover damages.

Correct AnswerverifiedShow Answer

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Insider trading occurs when a company em...
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Nonissuer exemption refers to an exempti...
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Certain securities are exempt from regis...
View Answer

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