Question 1

The JOBS Act requires the SEC to create a "crowdfunding exemption" that would allow companies to raise $1 million in any 12-month period.

Accepted Answer

The JOBS Act does require the SEC to create a crowdfunding exemption that would allow companies to raise up to $1 million in any 12-month period.

Question 2

A registration statement sets forth the key information contained in the prospectus.

Accepted Answer

False

Question 3

Regulation D is commonly referred to as the "private placement exemption" and allows no more than 35 nonaccredited investors per offering.

Accepted Answer

Regulation D does allow for a limited number of nonaccredited investors (up to 35), but it is not solely referred to as the "private placement exemption." It also includes other exemptions for certain types of offerings such as Rule 504 and Rule 506.

Question 4

Under the 1990 Remedies Act, the SEC has the power to suspend all trading when markets are excessively volatile.

Accepted Answer

The 1990 Remedies Act grants the SEC the authority to enact a variety of measures to address market volatility, including the ability to suspend all trading.

Question 5

The SEC requires that annual shareholder reports be submitted to shareholders in any proxy solicitation on behalf of management.

Accepted Answer

The SEC requires that annual shareholder reports be submitted to shareholders in any proxy solicitation on behalf of management.

Question 6

The Securities Act of 1933 prohibits "bad investment" offerings to the public.

Accepted Answer

The Securities Act of 1933 primarily requires that investors receive financial and other significant information concerning securities being offered for public sale, and it prohibits deceit, misrepresentations, and other fraud in the sale of securities. It does not specifically prohibit "bad investments."

Question 7

The Securities Act of 1933 allows a emerging growth company (EGC) with less than $1 million in revenues to waive the prospectus requirement.

Accepted Answer

The Securities Act of 1933 does allow for certain exemptions from the prospectus requirement, but having less than $1 million in revenues is not one of them. In fact, companies that qualify as EGCs have certain reduced disclosure requirements, but they are still required to provide a prospectus.

Question 8

The Securities Exchange Act of 1934 is concerned with the secondary distribution of securities in the national securities markets and in the over-the-counter markets.

Accepted Answer

This is a correct statement. The Securities Exchange Act of 1934 is a federal law that regulates the secondary securities market, including stock exchanges and over-the-counter markets. Its primary purpose is to protect investors and promote transparency in the securities markets.

Question 9

Under the Securities Act of 1933 a corporate bond would not be considered a security.

Accepted Answer

According to the Securities Act of 1933, a corporate bond is considered a security and is subject to regulation by the Securities and Exchange Commission (SEC).

Question 10

Unless exempted, exchanges, brokers, and dealers who deal in the securities traded in interstate commerce must register with the SEC.

Accepted Answer

This is stated in the Securities Exchange Act of 1934, which requires registration of exchanges, brokers, and dealers who deal in securities traded on interstate commerce.

Question 11

The Securities Act of 1933 was created to deal with 'penny stocks' and 'pump and dump schemes'.

Accepted Answer

The answer of The Securities Act of 1933 was created...

Question 12

One of the key elements in the Supreme Court's definition of an 'investment contract' is the right to a refund of the investment.

Accepted Answer

The key elements in the Supreme Court's definition of an 'investment contract' are the investment of money in a common enterprise with the expectation of profits solely from the efforts of others. The right to a refund of the investment is not a necessary element in this definition.

Question 13

The JOBS Act of 2012 expanded Regulation A to allow emerging enterprises to raise public capital efficiently and to allow more choices to investors through a simpler SEC registration process.

Accepted Answer

The statement is true. The JOBS Act of 2012 did expand Regulation A to allow emerging enterprises to raise public capital efficiently and provide more investment choices to investors through a simplified SEC registration process.

Question 14

At least 30 days must elapse from the date of a company's filing a registration statement with the SEC to the date the registration becomes effective.

Accepted Answer

The SEC does not have a mandatory 30-day waiting period for a registration statement to become effective. The timing can vary, and the SEC may declare a registration statement effective in less or more time, depending on the review process and any issues that need to be addressed.

Question 15

Companies whose securities are listed on a national securities exchange and unlisted companies with assets in excess of $10 million and 500 or more shareholders are exempt from the reporting requirements of the Securities Exchange Act of 1934.

Accepted Answer

Companies whose securities are listed on a national securities exchange are not exempt from the reporting requirements of the Securities Exchange Act of 1934, and unlisted companies with assets in excess of $10 million and 500 or more shareholders are also subject to reporting requirements.

Question 16

All private offerings of securities valued less than $100,000 are exempt from the SEC registration requirements.

Accepted Answer

The exemption from SEC registration requirements for private offerings does not solely depend on the value of the securities being less than $100,000. Exemptions are based on factors such as the type of securities offered, the sophistication of the investors, and the manner in which the offering is conducted, among others, as outlined in regulations like Regulation D.

Question 17

State blue sky laws typically deal with fraud and licensing.

Accepted Answer

State blue sky laws, also known as securities laws, regulate the offer and sale of securities within a state's jurisdiction. They typically address issues such as fraud, registration requirements, and licensing for firms and individuals that deal in securities.

Question 18

The Sarbanes-Oxley Act of 2002 contains a "clawback provision" which requires the CEO and CFO to reimburse the issuer for any bonus or incentive-based compensation received during the 12-month period following the issuance of the restated financial statements.

Accepted Answer

The statement is true. The clawback provision is a key feature of the Sarbanes-Oxley Act, and it requires CEOs and CFOs to pay back any bonus or incentive-based compensation they received if the company needs to issue restated financial statements due to material noncompliance with financial reporting requirements. The provision applies to compensation awarded during the 12-month period following the date the company files the restated financial statements with the SEC.

Question 19

Because of the widespread economic impact of the 2008 crisis, Congress passed The Dodd-Frank Act in 2012 to encourage investment in companies, especially smaller companies, by providing easier access of small firms to capital markets.

Accepted Answer

The Dodd-Frank Act, passed in 2010, was primarily aimed at preventing future financial crises by increasing regulation on financial institutions, not specifically to encourage investment in smaller companies by providing easier access to capital markets.

Question 20

The Sarbanes-Oxley Act of 2002 requires written certification of the 10-K and 10-Q reports by each company's CEO and CFO.

Accepted Answer

The Sarbanes-Oxley Act of 2002 indeed requires written certification of the 10-K and 10-Q reports by each company's CEO and CFO.

Quiz 45: Securities Regulation

The JOBS Act requires the SEC to create a "crowdfunding exemption" that would allow companies to raise $1 million in any 12-month period.

A registration statement sets forth the key information contained in the prospectus.

Regulation D is commonly referred to as the "private placement exemption" and allows no more than 35 nonaccredited investors per offering.

Under the 1990 Remedies Act, the SEC has the power to suspend all trading when markets are excessively volatile.

The SEC requires that annual shareholder reports be submitted to shareholders in any proxy solicitation on behalf of management.

The Securities Act of 1933 prohibits "bad investment" offerings to the public.

The Securities Act of 1933 allows a emerging growth company (EGC) with less than $1 million in revenues to waive the prospectus requirement.

The Securities Exchange Act of 1934 is concerned with the secondary distribution of securities in the national securities markets and in the over-the-counter markets.

Under the Securities Act of 1933 a corporate bond would not be considered a security.

Unless exempted, exchanges, brokers, and dealers who deal in the securities traded in interstate commerce must register with the SEC.

The Securities Act of 1933 was created to deal with 'penny stocks' and 'pump and dump schemes'.

One of the key elements in the Supreme Court's definition of an 'investment contract' is the right to a refund of the investment.

The JOBS Act of 2012 expanded Regulation A to allow emerging enterprises to raise public capital efficiently and to allow more choices to investors through a simpler SEC registration process.

At least 30 days must elapse from the date of a company's filing a registration statement with the SEC to the date the registration becomes effective.

Companies whose securities are listed on a national securities exchange and unlisted companies with assets in excess of $10 million and 500 or more shareholders are exempt from the reporting requirements of the Securities Exchange Act of 1934.

All private offerings of securities valued less than $100,000 are exempt from the SEC registration requirements.

State blue sky laws typically deal with fraud and licensing.

The Sarbanes-Oxley Act of 2002 contains a "clawback provision" which requires the CEO and CFO to reimburse the issuer for any bonus or incentive-based compensation received during the 12-month period following the issuance of the restated financial statements.

Because of the widespread economic impact of the 2008 crisis, Congress passed The Dodd-Frank Act in 2012 to encourage investment in companies, especially smaller companies, by providing easier access of small firms to capital markets.

The Sarbanes-Oxley Act of 2002 requires written certification of the 10-K and 10-Q reports by each company's CEO and CFO.