Question 1

The 1934 Act rules governing proxy solicitations would require a proxy statement describing the material facts relating to items to be voted upon.

Accepted Answer

The 1934 Act does require a proxy statement to describe the material facts relating to items to be voted upon in proxy solicitations.

Question 2

As amended in 2008, SEC Rule 144 imposes stricter requirements on securities resales of issuers subject to 1934 Act reporting requirements than on securities resales of non-reporting issuers.

Accepted Answer

SEC Rule 144 provides a safe harbor for the sale of securities under the Securities Act of 1933, and as amended in 2008, it generally applies the same holding period requirements to both reporting and non-reporting issuers. However, it does impose some additional conditions on affiliates or insiders of the issuer, regardless of the issuer's reporting status.

Question 3

Securities sold under Regulation A must be registered if they are resold.

Accepted Answer

Securities sold under Regulation A are exempt from registration requirements if they meet certain conditions, including limitations on the amount of securities that can be sold and restrictions on who can purchase them. However, if the securities are resold, they must be registered or qualify for an exemption from registration.

Question 4

Under the Dodd-Frank Act, the SEC must issue rules requiring issuers to disclose in annual proxy statements the reasons the issuer has chosen to combine or separate the positions of CEO and chairman of the board of directors.

Accepted Answer

This statement is true. Under Section 953(b) of the Dodd-Frank Act, the SEC is required to issue rules that mandate companies to disclose their policies with regard to the separation or combination of the CEO and chairman positions in their annual proxy statements. The rules also require the disclosure of specific details of the company's rationale for determining its leadership structure.

Question 5

The Securities Act of 1933 identifies a number of securities exemptions that are, in effect, transaction exemptions.

Accepted Answer

The Securities Act of 1933 does identify a number of transaction exemptions, such as exemptions for certain types of securities and transactions.

Question 6

The Securities Enforcement Remedies and Penny Stock Reform Act of 1990 granted the SEC the power to impose administrative, civil penalties up to the current inflation-adjusted amount of $725,000.

Accepted Answer

The Securities Enforcement Remedies and Penny Stock Reform Act of 1990 granted the SEC the power to impose administrative, civil penalties up to the current inflation-adjusted amount of $725,000.

Question 7

In 2006, the SEC abolished the requirement that a registration statement disclose compensation paid to senior executives and directors.

Accepted Answer

The SEC did not abolish the requirement to disclose compensation paid to senior executives and directors. In fact, in 2006, the SEC expanded the disclosure requirements related to executive compensation through the implementation of the "pay ratio rule."

Question 8

With few exceptions, an issuer must file preliminary proxy statements and forms with the SEC at least 10 days before they are sent to investors.

Accepted Answer

This is a requirement under SEC regulations (Rule 14a-6), which allows investors to review and provide feedback on the proposed matters to be voted upon at the shareholder meeting.

Question 9

The Securities Act of 1934 imposes significant disclosure requirements upon reporting companies.

Accepted Answer

The Securities Act of 1934 indeed imposes significant disclosure requirements upon reporting companies. These requirements include regular filings of financial reports, disclosures of insider transactions, and material events that could affect the company's financial performance.

Question 10

The tender offer is open to select holders of the class of shares subject to the tender offer.

Accepted Answer

The answer of The tender offer is open to select...

Question 11

Shelf registrations allow issuers to register securities that are to be offered and sold on a delayed or continuous basis in the future, but the provision allowing it does not apply to all companies.

Accepted Answer

This statement is true. Not all companies can use shelf registrations to register their securities for future offerings. The SEC has specific eligibility requirements for companies to use shelf registrations.

Question 12

Bonds are included in the definition of the term "security."

Accepted Answer

Bonds are considered a type of security, along with stocks, mutual funds, and other financial instruments.

Question 13

A registration statement must be signed by the issuer, its CEO, CFO, CAO, and majority of its board of directors.

Accepted Answer

According to the Securities Act of 1933, a registration statement must be signed by the issuer, its CEO, CFO, CAO, and a majority of its board of directors.

Question 14

The issuer of a registration statement has strict liability for its accuracy.

Accepted Answer

The Securities Act of 1933 imposes strict liability on the issuer of a registration statement for its accuracy. This means that if any material misstatements or omissions are found in the registration statement, the issuer can be held liable regardless of whether they knew about them or not. This is to protect investors and ensure that they have accurate information when making investment decisions.

Question 15

The SEC may not advance the effective date of a registration statement.

Accepted Answer

The SEC can accelerate the effective date of a registration statement upon request by the issuer, making the registration statement effective sooner than it would be under the normal waiting period.

Question 16

The due diligence defense generally requires the defendant to show that he had reasonable grounds to believe and did believe that there were no untrue statements or material omissions.

Accepted Answer

The due diligence defense does indeed require the defendant to demonstrate that they had reasonable grounds to believe and actually did believe that there were no untrue statements or material omissions in the information they provided. This defense is often used in cases of securities fraud, where a defendant's knowledge and intent are key factors in determining whether or not they are guilty of a criminal offense.

Question 17

The Securities Enforcement Remedies and Penny Stock Reform Act of 1990 granted the SEC the power to issue cease and desist orders and to impose civil penalties.

Accepted Answer

The Securities Enforcement Remedies and Penny Stock Reform Act of 1990 did grant the SEC the power to issue cease and desist orders and to impose civil penalties.

Question 18

A registration statement becomes public immediately on filing with the SEC, but a prospectus only becomes public upon signature of the chief financial officer.

Accepted Answer

A registration statement becomes public upon effectiveness declared by the SEC, while a prospectus becomes public upon filing with the SEC. Both do not require signature by the CFO.

Question 19

There are rigorously enforced restrictions regarding both number and qualification of investors who purchase securities under Regulation A.

Accepted Answer

Regulation A allows for a broader, less restricted pool of investors compared to traditional public offerings, and does not strictly limit the number or qualifications of investors who can participate.

Question 20

Rule 505, as promulgated by the SEC, provides a nonexclusive safe harbor for securing the intrastate exemption.

Accepted Answer

Rule 505 was part of Regulation D, which provided exemptions for certain private offerings, but it did not specifically address intrastate offerings. Rule 147 and Rule 147A are the rules that provide safe harbors for intrastate exemptions.

Quiz 39: Securities Regulation

The 1934 Act rules governing proxy solicitations would require a proxy statement describing the material facts relating to items to be voted upon.

As amended in 2008, SEC Rule 144 imposes stricter requirements on securities resales of issuers subject to 1934 Act reporting requirements than on securities resales of non-reporting issuers.

Securities sold under Regulation A must be registered if they are resold.

Under the Dodd-Frank Act, the SEC must issue rules requiring issuers to disclose in annual proxy statements the reasons the issuer has chosen to combine or separate the positions of CEO and chairman of the board of directors.

The Securities Act of 1933 identifies a number of securities exemptions that are, in effect, transaction exemptions.

The Securities Enforcement Remedies and Penny Stock Reform Act of 1990 granted the SEC the power to impose administrative, civil penalties up to the current inflation-adjusted amount of $725,000.

In 2006, the SEC abolished the requirement that a registration statement disclose compensation paid to senior executives and directors.

With few exceptions, an issuer must file preliminary proxy statements and forms with the SEC at least 10 days before they are sent to investors.

The Securities Act of 1934 imposes significant disclosure requirements upon reporting companies.

The tender offer is open to select holders of the class of shares subject to the tender offer.

Shelf registrations allow issuers to register securities that are to be offered and sold on a delayed or continuous basis in the future, but the provision allowing it does not apply to all companies.

Bonds are included in the definition of the term "security."

A registration statement must be signed by the issuer, its CEO, CFO, CAO, and majority of its board of directors.

The issuer of a registration statement has strict liability for its accuracy.

The SEC may not advance the effective date of a registration statement.

The due diligence defense generally requires the defendant to show that he had reasonable grounds to believe and did believe that there were no untrue statements or material omissions.

The Securities Enforcement Remedies and Penny Stock Reform Act of 1990 granted the SEC the power to issue cease and desist orders and to impose civil penalties.

A registration statement becomes public immediately on filing with the SEC, but a prospectus only becomes public upon signature of the chief financial officer.

There are rigorously enforced restrictions regarding both number and qualification of investors who purchase securities under Regulation A.

Rule 505, as promulgated by the SEC, provides a nonexclusive safe harbor for securing the intrastate exemption.