Question 1

The Securities Act of 1933 was the first of several pieces of legislation enacted after the financial collapse in 1929, which resulted in stocks losing more than __________ their value by 1933.

Accepted Answer

By 1933, stocks had lost more than fifty percent of their value following the financial collapse in 1929, highlighting the severity of the Great Depression and the need for regulatory reforms like the Securities Act of 1933.

Question 2

The Securities Act of 1933 was designed to protect __________ by requiring a procedure that would test the soundness of securities to be sold to the general public.

Accepted Answer

The Securities Act of 1933 was designed to protect investors by requiring securities to be registered and to disclose important financial information, thereby helping investors make informed decisions and reducing fraud.

Question 3

The centerpiece of the Securities Act of 1933 is Section __________, which makes it illegal to sell any security by use of mail or facilities of interstate commerce unless the security has been registered or unless the security fits into one of the statutory exemptions.

Accepted Answer

Section 5 of the Securities Act of 1933 is the centerpiece that makes it illegal to sell any security by use of mail or facilities of interstate commerce unless the security has been registered or fits into one of the statutory exemptions.

Question 4

What is commonly referred to as a __________ is actually a process of registration and disclosure mandated by the Securities Act of 1933.

Accepted Answer

A public offering refers to the process of offering shares of a private corporation to the public in a new stock issuance, which requires registration and disclosure as mandated by the Securities Act of 1933.

Question 5

In addition to mandates set out in the Securities Act of 1933, the __________ has added significant requirements pursuant to its authority as an independent regulatory agency.

Accepted Answer

The Securities and Exchange Commission (SEC) is the correct answer because it is an independent regulatory agency responsible for enforcing federal securities laws, proposing securities rules, and regulating the securities industry, the nation's stock and options exchanges, and other activities and organizations, including the electronic securities markets in the United States.

Question 6

The Securities Act of 1933's requirements for registration only apply to a limited number of __________.

Accepted Answer

The Securities Act of 1933 primarily applies to issuers, who are entities or individuals that offer securities (like stocks or bonds) for sale to the public, requiring them to register their securities with the SEC before they can be sold to the public, to ensure transparency and protect investors.

Question 7

Required documentation before registration includes:

Accepted Answer

A letter of intent, comfort letters, and an underwriting agreement are typical documents required before the registration of securities, as they outline preliminary agreements and assurances between the parties involved.

Question 8

Registering a security is a relatively complex process that is divided into __________ phases.

Accepted Answer

The answer of Registering a security is a relatively complex...

Question 9

The form of the registration statement is prescribed by SEC regulations and is broken down into two parts, the first part being the:

Accepted Answer

The first part of the registration statement prescribed by SEC regulations is the prospectus, which includes detailed information about the company's business, financial statements, and risks involved for investors.

Question 10

During the waiting period, the SEC may issue a __________ that prevents the registration from taking effect.

Accepted Answer

A refusal order is issued by the SEC during the waiting period to prevent a registration from becoming effective if there are issues or concerns with the registration documents or process.

Question 11

__________ issued by insurance companies are exempt from full SEC registration requirements.

Accepted Answer

Annuities issued by insurance companies are exempt from full SEC registration requirements because they are considered insurance products rather than securities. This exemption allows insurance companies to offer annuities without the extensive registration process required for most securities.

Question 12

A(n) __________ investor is one who has experience, business savvy, and knowledge of the market to the extent that the law imputes a certain cognizance of investment risk and the ability to protect his or her own interests.

Accepted Answer

An accredited investor is defined by various securities laws as one who has the financial sophistication and capacity to take on the risks of investment opportunities that are not registered with financial authorities, due to their income, net worth, asset size, governance status, or professional experience.

Question 13

An__________ is a professional in the securities market that agrees to facilitate the sale of stock to the public for a fee.

Accepted Answer

An underwriter is a professional or entity that assesses and assumes the risk of another party, often in financial transactions. In the context of the securities market, underwriters facilitate the sale of stock to the public, often by purchasing the securities from the issuer and selling them to investors, thereby assuming the risk of selling the securities at a profit. This process is crucial for companies looking to go public or raise capital through stock offerings.

Question 14

__________ is a method of fundraising and is subject to securities laws.

Accepted Answer

Crowdfunding is a method of fundraising that involves raising small amounts of money from a large number of people, typically via the internet, and is subject to securities laws when it involves investment opportunities.

Question 15

Crowdfunding gained a significant boost after the passage of the __________ of 2012.

Accepted Answer

The Jumpstart Our Business Startups (JOBS) Act of 2012 significantly boosted crowdfunding by easing securities regulations, making it easier for startups and small businesses to raise funds from a large number of people, typically via the internet.

Question 16

In __________, the SEC adopted rules that attempt to balance concerns about protecting relatively unsophisticated investors from fraud with helping to grow the economy by making more capital available from the investing public.

Accepted Answer

The answer of In __________, the SEC adopted rules that...

Question 17

__________ Crowdfunding also sets out investment limits for individuals based on net worth and income.

Accepted Answer

Regulation typically sets out investment limits for individuals in the context of crowdfunding, based on factors like net worth and income, to protect investors.

Question 18

A company issuing securities in reliance on Regulation Crowdfunding, the issuer, may raise a maximum aggregate amount of __________ during a 12-month period.

Accepted Answer

As of my last update, under Regulation Crowdfunding, an issuer may raise a maximum aggregate amount of $1,070,000 during a 12-month period. This limit is set by the U.S. Securities and Exchange Commission (SEC) to regulate crowdfunding activities and protect investors.

Question 19

Once the crowdfunding campaign has started, the issuer must provide an update on its progress toward meeting the target offering amount within __________ business days after reaching 50 percent and 100 percent of its target offering amount.

Accepted Answer

The issuer must provide an update within five business days after reaching 50 percent and 100 percent of its target offering amount according to crowdfunding regulations.

Question 20

If either of an investor's annual income or net worth is less than $107,000, then the investor's investment limit is the greater of (a) __________or (b) __________% of the lesser of the investor's annual income or net worth.

Accepted Answer

The correct answer is (A) $2,200 or 5%. According to the SEC's rules for Regulation Crowdfunding, if either an investor's annual income or net worth is less than $107,000, then the investor's investment limit over a 12-month period is the greater of $2,200 or 5% of the lesser of their annual income or net worth.

Quiz 33: Regulation of Issuance: The Securities Act of 1933