Question 1

In May 2009,National Biotech Corporation generally advertises that it will make a $4 million offering of stock in June.National makes the offer?ing as advertised and,ten days after the first sale,notifies the Securities and Exchange Commission (SEC).All buyers of the stock are given mate?rial information about the company,its business,and the stock.Before the end of the year,the offering is completely sold out.The buyers include forty unaccredited investors and fifty accredited investors.National does not register the offering.The SEC files a suit against National,seeking civil sanctions on the ground that this offering was not exempt from reg?istration.National argues that the applicable exemption is Rule 505 of Regulation D of the Securities Act of 1933 and that because of this exemp?tion,any resale of the stock is also exempt.Who is correct?

Accepted Answer

The answer of In May 2009,National Biotech Corporation generally advertises...

Question 2

Madison is the chief executive officer of Nitro Medico,Inc. ,which is required to file certain financial reports with the Securities and Exchange Commission (SEC).Under the Sarbanes-Oxley Act of 2002,Madison must

Accepted Answer

The Sarbanes-Oxley Act of 2002 requires CEOs to certify that the financial reports are complete and accurate. Therefore, Madison must choose option A.

Question 3

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

Under the Sarbanes-Oxley Act, the CFO is required to personally certify that the financial statements are accurate. This is known as the CEO/CFO Certification requirement. Delegating the responsibility for preparing the statements or delivering them to the SEC officer does not fulfill the CFO's personal responsibility for the accuracy of the statements. However, preparing the statements is not specified as the CFO's personal responsibility under the act.

Question 4

Dee,an accountant,does not work for Emergent Company,but wrong?fully obtains inside information concerning Emergent.Based on the in?forma?tion,Dee buys and sells Emergent stock for personal gain.The Securities and Exchange Commission prose?cutes Dee,arguing that she is liable because she stole in?formation right?fully belonging to another.This argument is

Accepted Answer

The misappropriation theory holds that a person can be liable for trading on material nonpublic information obtained by stealing or misappropriating such information from its rightful owner. In this case, Dee obtained inside information concerning Emergent without authorization, and therefore her actions fall under the misappropriation theory.

Question 5

Mo,an officer with NuProduct Company,receives a bounty payment,which is a payment from

Accepted Answer

The answer of Mo,an officer with NuProduct Company,receives a bounty...

Question 6

Della,an officer for Energy Petrol Corporation (EPC),buys 100 shares of EPC stock.One week later,EPC announces that it will merge with a competitor,Fuel Oil Company,and the price of EPC stock increases.One month later,Della sells her shares for a profit.Under Section 16(b)of the Securities Exchange Act of 1934,Della would not be liable if,after buying the stock,she had waited

Accepted Answer

Section 16(b) of the Securities Exchange Act of 1934 states that if an officer buys and sells the stock of their own company within a six-month period, they must disgorge any profit made. Therefore, Della would not be liable if she had waited more than six months to sell her shares.

Question 7

Heavy Hauling,Inc. ,is a public company whose shares are traded in the public securities markets.Under the Sarbanes-Oxley Act of 2002,to ensure that Heavy Hauling's financial results are accurate and timely,the firm's senior officers must set up and maintain

Accepted Answer

Under the Sarbanes-Oxley Act of 2002, senior officers of public companies are required to establish and maintain internal controls and procedures for accurate and timely financial reporting, also known as internal disclosure controls and procedures. This includes implementing controls over financial reporting and ensuring that all financial disclosures are complete, accurate, and timely. Option B, C, and D are not relevant to the requirements under the Sarbanes-Oxley Act.

Question 8

North American Properties,Inc. ,and its officers,directors,and share?holders,buy and sell securities.Section 16(b)of the Securities Exchange Act of 1934 covers

Accepted Answer

Section 16(b) of the Securities Exchange Act of 1934 covers only purchases and sales of securities involving short-swing profits, which are profits generated from buying and selling the same security within a six-month period. This rule applies to officers, directors, and beneficial owners of more than 10% of a company's stock.

Question 9

When Looking Glass Corporation wishes to issue certain securities,it must provide sufficient in?for?mation for Alice,and other unsophisticated investors,to evaluate the fi?nancial risk involved.Specifically,the law imposes liability for making a false statement or omission that is "material." What sort of information would Alice consider material?

Accepted Answer

The answer of When Looking Glass Corporation wishes to issue...

Question 10

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

The Sarbanes-Oxley Act of 2002 is a federal law that applies to all public companies, regardless of the state in which they are incorporated or do business. Therefore, Flux Corporation is subject to the direct corporate governance requirements of the federal government.

Question 11

Thom,an accountant for Uno Company,learns that Viral,a Uno director,has violated insider-trading laws.Thom does not suffer a loss in trading with Viral,but reports her to the Securities and Exchange Commission.Thom may be entitled to

Accepted Answer

Thom may be entitled to a bounty payment as a whistleblower who reported Viral's violation of insider-trading laws to the Securities and Exchange Commission. The bounty payment is typically a percentage of the sanctions imposed against the violators, which can range from 10% to 30%. Thom does not necessarily need to suffer a loss or seek damages to receive the bounty payment.

Question 12

Hi-Five Aero Corporation is required to register its securities under Section 12 of the Securities Exchange Act of 1934.Section 14(a)of the act regulates

Accepted Answer

Section 14(a) of the Securities Exchange Act of 1934 regulates the solicitation of proxies from a company's shareholders. As Hi-Five Corporation is required to register its securities under Section 12 of the act, it would need to comply with Section 14(a) when soliciting proxies from shareholders.

Quiz 27: Investor Protection, insider Trading, Corpgov

Madison is the chief executive officer of Nitro Medico,Inc. ,which is required to file certain financial reports with the Securities and Exchange Commission (SEC) .Under the Sarbanes-Oxley Act of 2002,Madison must

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

Mo,an officer with NuProduct Company,receives a bounty payment,which is a payment from

Heavy Hauling,Inc. ,is a public company whose shares are traded in the public securities markets.Under the Sarbanes-Oxley Act of 2002,to ensure that Heavy Hauling's financial results are accurate and timely,the firm's senior officers must set up and maintain

North American Properties,Inc. ,and its officers,directors,and share?holders,buy and sell securities.Section 16(b) of the Securities Exchange Act of 1934 covers

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

Thom,an accountant for Uno Company,learns that Viral,a Uno director,has violated insider-trading laws.Thom does not suffer a loss in trading with Viral,but reports her to the Securities and Exchange Commission.Thom may be entitled to

Hi-Five Aero Corporation is required to register its securities under Section 12 of the Securities Exchange Act of 1934.Section 14(a) of the act regulates