Question 1

For criminal sanctions to be imposed under Section 10(b)of the Securities Exchange Act of 1934 and SEC Rule 10b-5,scienter must not exist.

Accepted Answer

A) True 
 B)False

Question 2

The Securities Exchange Act of 1934 is a one-time disclosure law.

Accepted Answer

A) True 
 B)False

Question 3

The Securities and Exchange Commission does not regulate the content of proxy statements.

Accepted Answer

A) True 
 B)False

Question 4

The Securities and Exchange Commission administrative law judges hear cases involving alleged securities law violations.

Accepted Answer

A) True 
 B)False

Question 5

Fact Pattern 42-1A 
Fresh Fruits & Veggies,Inc. ,wants to make an initial public offering of securi?ties.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 42-1A.If Fresh is exempt from the federal registration requirement,Fresh is

Accepted Answer

A)  automatically exempt from any state registration requirement.
B)  not subject to any state securities laws.
C)  not necessarily exempt under a state registration requirement.
D)  automatically subject to all state registration requirements.E) None of the above
F) C) and D)

Question 6

Frothy Beverage Corporation is a public company whose shares are traded in the public securities markets.Under the Securities Act of 1933,Frothy is required to

Accepted Answer

A)  contribute to the operations of national stock exchanges.
B)  disclose financial and other information about its securities.
C)  engage in market surveillance to deter undesirable practices.
D)  solicit proxies for voting.E) A) and D)
F) B) and C)

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

Accepted Answer

A)  any other public company with which Flux exchanges shares.
B)  any state in which Flux does business.
C)  the federal government.
D)  the state in which Flux incorporated.E) A) and B)
F) A) and C)

Question 8

Catalina promises high returns to Darby and other investors,who then agree to trust their funds to Catalina.She uses these funds to pay previous investors.This is

Accepted Answer

A)  a Ponzi scheme.
B)  a stock option.
C)  an accredited investor.
D)  a tombstone ad.E) C) and D)
F) A) and C)

Question 9

Start-Up Enterprises,Inc. ,completes its registration process and be?gins ad?vertising the availability of its new issue of securi?ties.Start-Up places a tomb?stone ad in the financial papers.This ad tells pro?spective investors

Accepted Answer

A)  about investing.
B)  about the company.
C)  where to buy the securities.
D)  where to obtain a prospectus.E) B) and C)
F) C) and D)

Question 10

Exemptions from federal securities laws are exemptions from state laws.

Accepted Answer

A) True 
 B)False

Question 11

Most private,small-business,noninvestment company offers of securities are not exempt from the registration requirements.

Accepted Answer

A) True 
 B)False

Question 12

Anyone who wrongfully obtains inside information and trades on it for his or her personal gain can be liable under SEC Rule 10b-5.

Accepted Answer

A) True 
 B)False

Question 13

Under the Sarbanes-Oxley Act of 2002,chief executive officers no longer need to certify the accuracy of information in corporate financial statements.

Accepted Answer

A) True 
 B)False

Question 14

Fact Pattern 42-1A 
Fresh Fruits & Veggies,Inc. ,wants to make an initial public offering of securi?ties.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 42-1A.Fresh decides to sell its new securities via the Internet.This offering

Accepted Answer

A)  will avoid the payment of commissions to brokers or underwriters.
B)  is an investment scam.
C)  is a Ponzi scheme.
D)  constitutes insider trading.E) A) and D)
F) A) and C)

Question 15

Flo-Thru Plumbing Corporation is poised to issue securities that,under the Securities Act of 1933,are "exempt." This means that the securities can be sold

Accepted Answer

A)  on the basis of a material omission or misrepresentation.
B)  on the basis of nonpublic information.
C)  within any six-month period by certain insiders.
D)  without being registered.E) A) and B)
F) None of the above

Question 16

The Securities and Exchange Commission can bring a civil action against anyone who aids in a violation of the Securities Exchange Act of 1934.

Accepted Answer

A) True 
 B)False

Question 17

Rico,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.Rico buys 20,000 shares of Shur-2-Gro stock.He tells Taylor,who buys 15,000 shares.After the new hybrid is announced publicly,the price of Shur-2-Gro stock in?creases.Rico and Taylor sell their shares for a profit.Under the Securities Exchange Act of 1934,liability may be imposed on

Accepted Answer

A)  none of these parties.
B)  Rico and Taylor only.
C)  Rico only.
D)  Rico,Shur-2-Gro,and Taylor.E) B) and D)
F) B) and C)

Question 18

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.Jack buys the stock and suffers a loss.Hobie may be subject to

Accepted Answer

A)  government prosecution and Jack's suit.
B)  neither government prosecution nor Jack's suit.
C)  only government prosecution.
D)  only Jack's suit.E) A) and B)
F) B) and C)

Question 19

Kirk is the chief financial officer of Lemon Corporation,which is re?quired to file certain financial statements with the Securities and Exchange Commission (SEC) .Under the Sarbanes-Oxley Act of 2002,Kirk must personally

Accepted Answer

A)  certify that the statements are accurate.
B)  delegate the responsibility for preparing the statements.
C)  deliver the statements to the appropriate SEC officer.
D)  prepare the statements.E) B) and C)
F) None of the above

Question 20

Lex,a salesperson for Macro Corporation,learns that Macro will in?crease the dividend it pays to shareholders.Lex buys 1,000 shares of Macro stock.When the price increases,Lex sells his shares for a profit.Lex would not be liable for insider trading if the information about the dividend was

Accepted Answer

A)  material when he sold the stock.
B)  public after he bought the stock.
C)  public before he bought the stock.
D)  too speculative when he bought the stock.E) None of the above
F) C) and D)

Exam 42: B: Securities Law Corporate Governance

Correct Answer
verified

Most private,small-business,noninvestment company offers of securities are not exempt from the registration requirements.

Correct Answer
verified

For criminal sanctions to be imposed under Section 10(b)of the Securities Exchange Act of 1934 and SEC Rule 10b-5,scienter must not exist.

Correct Answer
verified

Flo-Thru Plumbing Corporation is poised to issue securities that,under the Securities Act of 1933,are "exempt." This means that the securities can be sold

Correct Answer
verified

The Securities and Exchange Commission can bring a civil action against anyone who aids in a violation of the Securities Exchange Act of 1934.

Correct Answer
verified

Correct Answer
verified

Exemptions from federal securities laws are exemptions from state laws.

Correct Answer
verified

Kirk is the chief financial officer of Lemon Corporation,which is re?quired to file certain financial statements with the Securities and Exchange Commission (SEC) .Under the Sarbanes-Oxley Act of 2002,Kirk must personally

Correct Answer
verified

Frothy Beverage Corporation is a public company whose shares are traded in the public securities markets.Under the Securities Act of 1933,Frothy is required to

Correct Answer
verified

The Securities Exchange Act of 1934 is a one-time disclosure law.

Correct Answer
verified

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

Correct Answer
verified

The Securities and Exchange Commission administrative law judges hear cases involving alleged securities law violations.

Correct Answer
verified

Under the Sarbanes-Oxley Act of 2002,chief executive officers no longer need to certify the accuracy of information in corporate financial statements.

Correct Answer
verified

Lex,a salesperson for Macro Corporation,learns that Macro will in?crease the dividend it pays to shareholders.Lex buys 1,000 shares of Macro stock.When the price increases,Lex sells his shares for a profit.Lex would not be liable for insider trading if the information about the dividend was

Correct Answer
verified

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.Jack buys the stock and suffers a loss.Hobie may be subject to

Correct Answer
verified

Catalina promises high returns to Darby and other investors,who then agree to trust their funds to Catalina.She uses these funds to pay previous investors.This is

Correct Answer
verified

The Securities and Exchange Commission does not regulate the content of proxy statements.

Correct Answer
verified

Start-Up Enterprises,Inc. ,completes its registration process and be?gins ad?vertising the availability of its new issue of securi?ties.Start-Up places a tomb?stone ad in the financial papers.This ad tells pro?spective investors

Correct Answer
verified

Anyone who wrongfully obtains inside information and trades on it for his or her personal gain can be liable under SEC Rule 10b-5.

Correct Answer
verified

Correct Answer
verified

Exam 42: B: Securities Law Corporate Governance

Correct AnswerverifiedShow Answer

Most private,small-business,noninvestment company offers of securities are not exempt from the registration requirements.

Correct AnswerverifiedShow Answer

For criminal sanctions to be imposed under Section 10(b)of the Securities Exchange Act of 1934 and SEC Rule 10b-5,scienter must not exist.

Correct AnswerverifiedShow Answer

Flo-Thru Plumbing Corporation is poised to issue securities that,under the Securities Act of 1933,are "exempt." This means that the securities can be sold

Correct AnswerverifiedShow Answer

The Securities and Exchange Commission can bring a civil action against anyone who aids in a violation of the Securities Exchange Act of 1934.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Exemptions from federal securities laws are exemptions from state laws.

Correct AnswerverifiedShow Answer

Kirk is the chief financial officer of Lemon Corporation,which is re?quired to file certain financial statements with the Securities and Exchange Commission (SEC) .Under the Sarbanes-Oxley Act of 2002,Kirk must personally

Correct AnswerverifiedShow Answer

Frothy Beverage Corporation is a public company whose shares are traded in the public securities markets.Under the Securities Act of 1933,Frothy is required to

Correct AnswerverifiedShow Answer

The Securities Exchange Act of 1934 is a one-time disclosure law.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

The Securities and Exchange Commission administrative law judges hear cases involving alleged securities law violations.

Correct AnswerverifiedShow Answer

Under the Sarbanes-Oxley Act of 2002,chief executive officers no longer need to certify the accuracy of information in corporate financial statements.

Correct AnswerverifiedShow Answer

Lex,a salesperson for Macro Corporation,learns that Macro will in?crease the dividend it pays to shareholders.Lex buys 1,000 shares of Macro stock.When the price increases,Lex sells his shares for a profit.Lex would not be liable for insider trading if the information about the dividend was

Correct AnswerverifiedShow Answer

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.Jack buys the stock and suffers a loss.Hobie may be subject to

Correct AnswerverifiedShow Answer

Catalina promises high returns to Darby and other investors,who then agree to trust their funds to Catalina.She uses these funds to pay previous investors.This is

Correct AnswerverifiedShow Answer

The Securities and Exchange Commission does not regulate the content of proxy statements.

Correct AnswerverifiedShow Answer

Start-Up Enterprises,Inc. ,completes its registration process and be?gins ad?vertising the availability of its new issue of securi?ties.Start-Up places a tomb?stone ad in the financial papers.This ad tells pro?spective investors

Correct AnswerverifiedShow Answer

Anyone who wrongfully obtains inside information and trades on it for his or her personal gain can be liable under SEC Rule 10b-5.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

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