Question 1

Directors A and B of a large,publicly traded company filed advance reports of their plans to sell stock.Such advanced filed plans allow directors and officers to sell shares without having to worry about whether they have inside information at the time of the sale.The dates for their sales are locked in for one year.Directors A and B have,however,encouraged the CEO to announce a boost in sales and revenues prior to the quarterly financial statement release because such an announcement would allow the information to go public and thereby allow them to sell their shares,according to their prior-approved plan,at a much higher price.Which of the following is correct?

Accepted Answer

The answer of Directors A and B of a large,publicly...

Question 2

Jason Grady works on the loading dock at VIP Enterprises,Inc.Jason has noticed that shipments have slowed down for the past two months.VIP will issue its quarterly earnings report in three days.During a pool game at a local bar,Jason mentions to one of his friends that VIP is struggling because he is not loading the shipments he once did.Jason's friend positions himself short in VIP stock the next day.When VIP announces it quarterly earnings the next day,VIP's stock drops 17% and Jason's friend was able to make $5,200 on his short position.Which of the following statements is correct?​

Accepted Answer

Section 10b of the Securities Exchange Act of 1934, and Rule 10b-5 thereunder, prohibit fraudulent activities of any kind in connection with the purchase or sale of securities, regardless of the insider's position within the company, the intent behind the communication, or the type of trading strategy employed (including short positions). Jason's unintentional tip that led to his friend profiting from a short position based on non-public, material information could still fall under insider trading regulations.

Question 3

If a company has made an offering under the Rule 504 exemption and had misrepresentations in the materials it gave to investors,which of the following is true?​

Accepted Answer

Shareholders could recover under Section 12 of the Securities Act of 1933, which allows for civil liabilities in case of misstatements or omissions of material facts in the prospectus or oral communications.

Question 4

Jones Knight is a small copper mining company with operations in Arizona,South America,and Montana.It is listed on NASDAQ and is preparing to do a public offering for $50,000,000.Which of the following exemptions could Jones Knight use in order to avoid registration?​

Accepted Answer

Jones Knight can use Regulation D - Section 506 exemption to avoid registration. This exemption allows the company to sell securities to accredited investors and a limited number of unaccredited investors without registering with the SEC. As a publicly-traded company, they would not be able to use other Reg D exemptions, but Section 506 is still available. The intrastate exemption would not be applicable since Jones Knight has operations in multiple states and South America. Section 11 registration is not an exemption but rather a requirement for companies offering securities to the public.

Question 5

The following stock transactions were completed by the executive vice president of Vinco,Inc.,a publicly traded corporation: January 12,2016 -EVP sells 100 shares @ $40 per share
May 5,2016 - EVP buys 100 shares @ $20 per share
June 1,2016 - EVP sells 100 shares @ $30 per share
Which of the following statements is correct?

Accepted Answer

The EVP has a short-swing profit of $2,000. The profit is calculated by matching the purchase on May 5 at $20 with the sale on June 1 at $30, resulting in a profit of $10 per share for 100 shares, totaling $1,000. Additionally, the sale on January 12 at $40 can be matched with the purchase on May 5 at $20, resulting in another $2,000 profit. However, only the $2,000 profit from the May 5 purchase and June 1 sale is considered a short-swing profit under SEC rules.

Question 6

A shareholder who was buying additional shares in Wayport,Inc.,told the shareholder seller "he was not aware of any bluebirds of happiness in the corporation's world." However,at the time the buyer made the statement he was aware that the CEO had informed the board via e-mail of a patent sale by Wayport that meant that the corporation would receive net proceeds of $7.6 million and would increase its year-end cash position by 22%.Which of the following statements is correct?

Accepted Answer

The buyer's statement is misleading because he is aware of material information about the corporation that he is not disclosing to the seller. This could constitute securities fraud under Rule 10b-5, which prohibits the making of any untrue statement of a material fact or omission of a material fact that makes a statement misleading. The seller could have a claim against the buyer for securities fraud.

Question 7

Ralph Newsome is an employee at Quest Industries.In the men's room he overhears two officers discussing a merger that they say will be announced in two days.Ralph purchases 1,000 shares of Quest.When the merger is announced,Quest's stock has a 15% bounce in value.

Accepted Answer

Ralph overheard non-public information related to the company and used it to his advantage by purchasing Quest's stock. This is illegal and considered insider trading.

Question 8

Which of the following powers does PCAOB $\underline{\text{not}}$ have?​

Accepted Answer

The PCAOB's authority was not limited by a U.S. Supreme Court decision. The other options, including A, B, D, are all powers that the PCAOB possesses.

Question 9

Greg Wanlass is the vice president of talent development for M & T Savings and Thrift,a publicly traded corporation that is listed on the NYSE.Greg has just purchased a home and borrowed the money from M & T,at its regular interest rate.With regard to this loan:​

Accepted Answer

The loan is not prohibited by SOX. SOX only prohibits loans to executives and directors if they are not made on the same terms as loans made available to the general public. As long as the loan was at M & T's regular interest rate, it is considered to be on the same terms as loans made to the general public and therefore allowed under SOX.

Question 10

J.Rooney is Chairman of Rooney,Pace Group,Inc.and has decided to acquire stock in Pantry Pride.Rooney is able to purchase 7 percent of the stock in October 2016.Is Rooney subject to any SEC requirements? Discuss.

Accepted Answer

The answer of J.Rooney is Chairman of Rooney,Pace Group,Inc.and has...

Question 11

Which of the following were created as part of the JOBS act?​

Accepted Answer

The JOBS Act, enacted in 2012, introduced provisions for crowdfunding to allow small businesses to raise capital from a large number of investors.

Question 12

The executive vice president for Best Buy appeared on television in an interview about how Best Buy was doing because of concerns about the abrupt departure of the company's CEO.The executive vice president said,"Customers are lining up at our stores and television sales are going really strong." Which of the following is correct about the EVP's statements?

Accepted Answer

The EVP's statement is too general and does not contain specific numbers or facts to constitute a basis for a 10(b) claim. Without specific information, the statement is not a material misrepresentation that would give rise to liability for securities fraud.

Question 13

Under the JOBS Act,emerging growth companies:​

Accepted Answer

Emerging growth companies under the JOBS Act can delay compliance with certain requirements of the 1934 Act, such as auditor attestation of internal controls.

Question 14

What is the statute of limitations for bringing a civil law suit for securities fraud?​

Accepted Answer

The statute of limitations for bringing a civil lawsuit for securities fraud is not universally set at 180 days, two years, or five years after the offering is made. It can vary based on jurisdiction, the specific laws involved (federal or state), and the nature of the fraud. Therefore, none of the provided options accurately state a universal statute of limitations for securities fraud lawsuits.

Question 15

Which of the following is $\underline{\text{not}}$  part of a CEO and CFO certification of financial statements?​

Accepted Answer

CEO and CFO certification of financial statements includes reviewing the financial statements (A), ensuring there are no untrue statements (B), and certifying that the financial statements represent all material aspects of the company's financial performance (D). However, external auditor certification of internal controls is not typically included in CEO and CFO certification.

Question 16

Which of the following requirements crosses all types of Regulation D exempt offerings?​

Accepted Answer

Regulation D offerings do not universally require audited financial statements, a registered portal, or limit investor amounts across all its exemptions, making D the correct choice.

Question 17

Under the new securities rules issued under the JOBS Act,which of the following companies would need to register its securities under the 1934 Securities Exchange Act for purposes of periodic reporting?

Accepted Answer

The answer of Under the new securities rules issued under...

Question 18

Why was Goldman Sachs not obligated to disclose its position on securities it was marketing to its clients?

Accepted Answer

Goldman Sachs was not obligated to disclose its position on securities it was marketing to its clients because it was using the 506 exemption under Regulation D of the Securities Act of 1933. This exemption allows companies to sell securities without a full registration process, under certain conditions, including not needing to provide the same level of disclosure to accredited investors.

Question 19

Director X of the ABC Corporation,listed on the NYSE,has engaged in the following transactions in ABC's stock: January 1,2017 -purchased 300 shares of ABC stock for $30 per share
January 15,2017- sold 300 shares of ABC stock for $35 per share
January 30,2017 -purchased 300 shares of ABC stock for $25
February 3,2017 -sold 300 shares of ABC stock for $20
Which of the following is correct?
​

Accepted Answer

The director has engaged in both purchases and sales within a six-month period, which could trigger short-swing profit rules under SEC Rule 16b, but the net result of these transactions is a loss, not a gain. However, the statement about not being subject to restrictions on short-swing profits is incorrect, as directors of publicly traded companies are subject to these rules. The calculation provided in option B does not accurately reflect the overall financial outcome of these transactions.

Question 20

The safe-harbor provision:​

Accepted Answer

The answer of The safe-harbor provision:​
...

Quiz 18: Governance and Regulation: Securities Law

If a company has made an offering under the Rule 504 exemption and had misrepresentations in the materials it gave to investors,which of the following is true?​

Jones Knight is a small copper mining company with operations in Arizona,South America,and Montana.It is listed on NASDAQ and is preparing to do a public offering for $50,000,000.Which of the following exemptions could Jones Knight use in order to avoid registration?​

Ralph Newsome is an employee at Quest Industries.In the men's room he overhears two officers discussing a merger that they say will be announced in two days.Ralph purchases 1,000 shares of Quest.When the merger is announced,Quest's stock has a 15% bounce in value.

Which of the following powers does PCAOB not‾\underline{\text{not}}not​ have?​

Greg Wanlass is the vice president of talent development for M & T Savings and Thrift,a publicly traded corporation that is listed on the NYSE.Greg has just purchased a home and borrowed the money from M & T,at its regular interest rate.With regard to this loan:​

J.Rooney is Chairman of Rooney,Pace Group,Inc.and has decided to acquire stock in Pantry Pride.Rooney is able to purchase 7 percent of the stock in October 2016.Is Rooney subject to any SEC requirements? Discuss.

Which of the following were created as part of the JOBS act?​

Under the JOBS Act,emerging growth companies:​

What is the statute of limitations for bringing a civil law suit for securities fraud?​

Which of the following is not‾\underline{\text{not}}not​ part of a CEO and CFO certification of financial statements?​

Which of the following requirements crosses all types of Regulation D exempt offerings?​

Under the new securities rules issued under the JOBS Act,which of the following companies would need to register its securities under the 1934 Securities Exchange Act for purposes of periodic reporting?

Why was Goldman Sachs not obligated to disclose its position on securities it was marketing to its clients?

The safe-harbor provision:​

If a company has made an offering under the Rule 504 exemption and had misrepresentations in the materials it gave to investors,which of the following is true?

Jones Knight is a small copper mining company with operations in Arizona,South America,and Montana.It is listed on NASDAQ and is preparing to do a public offering for $50,000,000.Which of the following exemptions could Jones Knight use in order to avoid registration?

Which of the following powers does PCAOB $\underline{\text{not}}$ have?

Greg Wanlass is the vice president of talent development for M & T Savings and Thrift,a publicly traded corporation that is listed on the NYSE.Greg has just purchased a home and borrowed the money from M & T,at its regular interest rate.With regard to this loan:

Which of the following were created as part of the JOBS act?

Under the JOBS Act,emerging growth companies:

What is the statute of limitations for bringing a civil law suit for securities fraud?

Which of the following is $\underline{\text{not}}$ part of a CEO and CFO certification of financial statements?

Which of the following requirements crosses all types of Regulation D exempt offerings?

The safe-harbor provision: