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1. A preliminary prospectus, permitted under SEC Regulations, is known as the
A) Unaudited prospectus
B) Qualified prospectus
C) Blue Sky Prospectus
D) Red Herring prospectus

D) a preliminary prospectus is usually called a red herring prospectus. It indicates that a registration statement has been filed but has not become effective

2. Under the SEC Act of 1934, which of the following types of instruments is excluded from the definition of securities:
A) Investment contracts
B) Convertible debentures
C) Nonconvertible debentures
D) Certificates of deposit

D) Securities include debentures, stocks, bonds, some notes and investment contracts. The main idea is that the investor intends to make a profit on the investment through the efforts of others. A certificate of deposit os a type of commercial paper, not a security

3. A tombstone advertisement
A) May be substituted for the prospectus under certain circumstances
B) May contain an offer to sell securities
C) Notifies prospective investors that a previously offered security has been withdrawn from the market and is therefore dead
D) Makes known the availability of a prospectus

D) A tombstone advertisement is allowed to inform potential investors that a prospectus for the given company is available. It is not an offer to sell or the solicitation of an offer to buy the securities.

4. Under the SEC act of 1933, which of the following statements most accurately reflects how securities registration affects as investor?
A) The investor is provided with information on the stockholders of the offering corporation
B) The investor is provided with information on the principal purposes for which the offering's proceeds will be used
C) The investor is guaranteed by the SEC that the facts contained in the registration statement are accurate
D) The investor is assured by the SEC against loss resulting from purchasing the security

B) The registration of securities under the Securities Act of 1933 has as its purpose to provide potential investors with full and fair disclosure of all material information relating to the issuance of securities, including such information as the principal purposes for which the offering's proceeds will be used

5. Which of the following statements concerning the prospectus required by the securities act of 1933 is correct?
A) The prospectus is a part of the registration statement
B) The prospectus should enable the SEC to pass on the merits of the securities
C) The prospectus must be filed after an offer to sell
D) The prospectus is prohibited until the SEC approves the accuracy of the facts embodied therein

A) If no exemption is applicable under the Securities Act of 1933, public offerings must be registered with the SEC accompanied by a prospectus.

6. Sandy corporation is considering the following issuances:
I. Notes with maturities of three months to be used for commercial purposes and having a total aggregate value of $500,000
II. Notes with maturities of 2 years to be used for investment purposes and having a total aggregate value of $300,000
III. Notes with maturities of two years to be used for commercial purposes and having a total aggregate value of $200,000
Which is exempt from the Securities Act of 1933?
A) I
B) II
C) I & III
D) All 3

A) Notes are exempt securities under the Securities Act of 1933 if they have a maturity of nine months or less and if they are also used for commercial purposes rather than investments. The actual dollar amounts in the question are not a factor. The notes described in II are not exempt for 2 reasons; they have a maturity of 2 years and are used for investment purposes.

7. Sandy corporation is considering the following issuances:
I. Notes with maturities of three months to be used for commercial purposes and having a total aggregate value of $500,000
II. Notes with maturities of 2 years to be used for investment purposes and having a total aggregate value of $300,000
III. Notes with maturities of two years to be used for commercial purposes and having a total aggregate value of $200,000
Which is subject to the antifraud provisions of the SEC act of 1933
A) I
B) II
C) I & III
D) All 3

D) Whether the securities are exempt from registration or not, they are still subject to the antifraud provisions of the securities act of 1933

8. Which of the following is not a security under the definition for the Securities act of 1933?
A) Any note
B) Bond certificate of interest
C) Debenture
D) All the above are securities

D) The definition of a security is very broad under the Securities Act of 1933. The basic idea is that the investor intends to make a profit through the efforts of others rather than through his/her own efforts. Notes, bond certificates of interest, and debentures are all considered securities

9. Which of the following requirements must be met by an issuer of securities who wants to make an offering by using shelf registration
A) Original registration statement must be kept updated?
B) The offer must be a first time issuer of securities

A) If an issuer of securities wants to make an offering by using shelf registration, the actual issuance takes place over potentially a long period of time. Therefore, he must keep the original registration statement updated. There is no requirement that the offeror must be a first time issuer of securities

10. Which of the following securities would be regulated by the provisions of the Securities Act of 1933
A) Securities issued by not-for-profit, charitable organizations
B) Securities guaranteed by domestic government organizations
C) Securities issued by savings and loan associations
D) Securities issued by insurance companies

D) Under the 1933 Act, certain securities are exempt. Although insurance and annuity contracts are exempt, securities issued by the insurance companies are not.

11. Which of the following securities is exempt from registration under the securities act of 1933?
A) Shares of nonvoting common stock, provided their par value is less than $1
B) A class of stock given in exchange for another class by the issuer to its existing shareholders without the issuer paying a commission
C) Limited partnership interests sold for the purpose of acquiring funds to invest in bonds issued by the U.S.
D) Corporate debentures that were previously subject to an effective registration statement, provided they are convertible into shares of common stock

B) Securities exchanged for other securities by the issuer exclusively with its existing shareholders are exempt from registration under the 1933 act as long as no commission is paid and both sets of securities are issued by the same issuer.

12. Universal Corp. intends to sell its common stock to the public in an interstate offering that will be registered under the Securities Act of 1933. Under the Act,
a. Universal can make offers to sell its stock before filing a registration statement, provided that it do not actually issue stock certificates until after the registration is effective.
b. Universal's registration statement becomes effective at the time it is filed, assuming the SEC does not object within twenty days thereafter.
c. A prospectus must be delivered to each purchase of Universal's common stock unless the purchaser qualifies as an accredited investor.
d. Universal's filing of a registration statement with the SEC does not automatically result in compliance with the "Blue Sky" laws of the states in which the offering will be made

12. (d) Even though the issuer may comply with the Federal Securities Act of 1933, it must also comply with any applicable state "blue-sky" laws that regulate the securities at the state level. Answer (a) is incorrect because it is unlawful for the company to offer or sell the securities prior to the effective registration date. Answer (b) is incorrect because registration becomes effective on the twentieth day after filing unless the SEC issues a stop order.

13. If securities are exempt from the registration provisions securities Act of 1933, any fraud committed in the of selling such securities can be challenged by
SEC Person defrauded
A Yes Yes
B Yes No
C No Yes
D No No

13. (a) Even if the securities are exempt under the Securities Act of 1933, they are still subject to the antifraud provisions. Both the person defrauded and the SEC can challenge the fraud committed in the course of selling the securities.

14. Issuers of securities are normally required under the SEC Act of 1933 to file a registration statement with Securities Exchange Commission before these securities either offered or sold to the general public. Which of the following is a reason why the SEC adopted the registration cement forms called Form S-2 and Form S-3?
a. To require more extensive reporting.
b. To be filed along with Form S-1.
c. To reduce the burden that issuers have under the securities laws.
d. To reduce the burden of disclosure that issuers have for intrastate issues of securities.

14. (c) The SEC adopted the Forms S-2 and S-3 to decrease the work that issuers have in preparing registration statements by permitting them to give less detailed disclosure under certain conditions than Form S-1 which is the basic long form.

15. Regulation D provides for important exemptions to registration of securities under the Securities Act of 1933. Ulrich of the following would be exempt?
I Issuance of $500,000 of securities sold in a twelve-month period to forty investors.
II Issuance of $2,000,000 of securities sold in a twelve- month period to ten investors. The issuer restricts the right of the purchasers to resell for two years.
a. I only.
b. II only.
c. Both I and II
d. Neither I nor II.

15. (c) The issuance described in I is exempt because Rule 504 exempts an issuance of securities up to $1,000,000 sold in a twelve-month period to any number of investors. The issuer is not required to restrict the purchasers' resale. The issuance described in II is also exempt because Rule 505 exempts an issuance up to $5,000,000 sold in a twelve-month period. It permits sales to thirty-five unaccredited investors and to any number of accredited investors Since there were only ten investors, this is met. The issuer also restricted the purchasers' right to resell for two years as required.

16. Pix Corp. is making a $6,000,000 stock offering. Pix wants the offering exempt from registration under the Securities Act of 1933. Which of the following provisions of the Act would Pix have to comply with for the offering to be exempt?
a. Regulation A.
b. Regulation D, Rule 504.
c. Regulation D, Rule 505.
d. Regulation D, Rule 506.

16. (d) Under Regulation D, Rule 504 exempts an issuance of securities up to $1,000,000 sold in a twelve-month period. Rule 505 exempts an issuance of up to $5,000,000 in a twelve-month period. So Rule 506 has to be resorted to for amounts over $5,000,000. Regulation A can be used only for issuances up to $1,500,000.

17. Eldridge Corporation is seeking to offer $7,000,000 of securities under Regulation D of the Securities Act of 1933. Which of the following is(are) true if Eldridge wants an exemption from registration under the Securities Act of
1933?
I. Eldridge must comply with Rule 506 of Regulation D.
II. These securities could be debentures.
III. These securities could be investment contracts.
a. I only.
b. I and II only.
c. II and III only.
d. I, II, and III.

17. (d) When more than $5,000,000 in securities are being offered, an exemption from the registration requirements of the Securities Act of 1933 is available under Rule 506 of Regulation D. Securities under the Act include debentures and investment contracts.

18. An offering made under the provisions of Regulation A of the Securities Act of 1933 requires that the issuer
a. File an offering circular with the SEC.
b. Sell only to accredited investors,
c. Provide investors with the prior four years' audited financial statements.
d. Provide investors with a proxy registration statement.

18. (a) Under Regulation A of the 1933 Act, the issuer must file an offering circular with the SEC. Answer (b) is incorrect because the rules involving sales to unaccredited and accredited investors are in Regulation D, not Regulation A. Answer (c) is incorrect because although financial information about the corporation must be provided to offerees, the financial statements in the offering circular need not be audited. .Answer (d) is incorrect because the issuer is not required to provide investors with a proxy registration statement under Regulation A.

19. Which of the following facts will result in an offering of securities being exempt from registration under the Securities~Act 1933?
a. The securities are nonvoting preferred stock.
b. The issuing corporation was closely held prior to the offering.
c. The sale or offer to sell the securities is made by a person other than an issuer, underwriter, or dealer.
d. The securities are AAA-rated debentures that are collateralized by first mortgages on property that has a market value of 200% of the offering price.

19. (c) Sales or offers to sell by any person other than an issuer, underwriter, or dealer are exempt under the 1933 Act. Answer (a) is incorrect because the Act covers all types of securities including preferred stock. Answer (b) is incorrect because closely held corporations are not automatically exempt. Answer (d) is incorrect because debentures, as debt securities, are covered under the Act even if they are highly rated or backed by collateral.

20. Regulation D of the Securities Act of 1933
a. Restricts the number of purchasers of an offering to thirty-five.
b. Permits an exempt offering to be sold to both accredited and nonaccredited investors.
c. Is limited to offers and sales of common stock that do not exceed $1.5 million.
d. Is exclusively available to small business corporations as defined by Regulation D.

20. (b) Regulation D of the Securities Act of 1933 establishes three important exemptions in Rules 504, 505, and 506. Although Rules 505 and 506 have some restrictions on sales to nonaccredited investors, all three rules under Regulation D allow sales to both nonaccredited and accredited investors with varying restrictions. Answer (a) is incorrect because although Rules 505 and 506 allow sales up to thirty-five nonaccredited investors, all three rules allow sales to an unlimited number of accredited investors.

21. Frey, Inc. intends to make a $2,000,000 common stock offering under Rule 505 of Regulation D of the Securities Act of 1933. Frey
a. May sell the stock to an unlimited number of investors.
b. May make the offering through a general
advertising.
c. Must notify the SEC within fifteen days after the first sale of the offering.
d. Must provide all investors with a prospectus.

21. (c) Under Rule 505 of Regulation D, the issuer notify the SEC of the offering within fifteen days after I first sale of the securities. Answer (a) is incorrect because under Rule 505, the issuer may sell to an unlimited nun of accredited investors and to thirty-five unaccredited investors. Answer (b) is incorrect because no general offs or solicitation is permitted. Answer (d) is incorrect bee the accredited investors need not receive any formal information. The unaccredited investors, however, must receive a formal registration statement that gives a description offering.

22. Under Regulation D of the Securities Act of 1933, which of the following conditions apply to private placement offerings? The securities
a. Cannot be sold for longer than a six-month period.
b. Cannot be the subject of an immediate unregistered reoffering to the public.
c. Must be sold to accredited institutional investors.
d. Must be sold to fewer than twenty nonaccredited investors.

22. (b) The private placement exemption permits sales of an unlimited number of securities for any dollar amount when sold to accredited investors. This exemption also lows sales to up to thirty-five nonaccredited investors if are also sophisticated investors under the Act. Resales a these securities are restricted for two years after the date the issuer sells the last of the securities.

23. Which of the following statements concerning an initial intrastate securities offering made by an issuer residing in and doing business in that state is correct?
a. The offering would be exempt from the registration requirements of the Securities Act of 1933.
b. The offering would be subject to the registration requirements of the Securities Exchange Act of 1934.
c. The offering would be regulated by the SEC.
d. The shares of the offering could not be resold to investors outside the state for at least one year.

23. (a) When the issuer is a resident of that state, i 80% of its business in that state, and only sells or offers securities to residents of the same state, the offering qualifies for an exemption under the 1933 Act as an intrastate is Answer (b) is incorrect as the offering also qualifies for exemption under the 1934 Act. Therefore, as the offering is exempted from both the 1933 and 1934 Acts, it would^ regulated by the SEC.

24. Pix Corp. is making a $6,000,000 stock offering. Pix wants the offering exempt from registration under the Securities Act of 1933. Which of the following requirements would Pix have to comply with when selling the securities?
a. No more than thirty-five investors.
b. No more than thirty-five nonaccredited investors.
c. Accredited investors only.
d. Nonaccredited investors only.

24. (b) Rule 506 permits sales to thirty-five unaccredited investors and to an unlimited number of accredit investors. The unaccredited investors must also be sophisticated investors (i.e., individuals with knowledge and experience in financial matters).

25. Which of the following transactions will be exempt from the full registration requirements of the Securities Act of 1933?
a. All intrastate offerings.
b. All offerings made under Regulation A.
C. Any resale of a security purchased under a Regulation D offering.
d. Any stockbroker transaction.

25. (b) Under Regulation A, an offering statement is required instead of the more costly disclosure required of full registration under the Securities Act of 1933. answer (a) is incorrect because not all intrastate offers exempt. They must meet specified requirements to exempt. Answer (c) is incorrect because many security under Regulation D cannot be resold for two years.

26. - Under Rule 504 of Regulation D of the Securities Act of 1933, which of the following is(are) required?
I. No general offering or solicitation is permitted.
II. The issuer must restrict the purchasers' right to resell the securities.
a. I only.
b. II only.
c. Both I and II.
d. Neither I nor II

D) under the Rule 504 of regulation D, general offerings and solicitations are permitted. Also, the issuer need not restrict the purchasers' right to sell. Note that both I and II are requirements of rules 505 and 506 of regulation D

27. Dean, Inc., a publicly traded corporation, paid a $10,000 bribe to a local zoning official. The bribe was recorded in Dean's financial statements as a consulting fee. Dean's unaudited financial statements were submitted to the SEC as part of a quarterly filing. Which of the following federal statutes did Dean violate?
a. Federal Trade Commission Act.
b. Securities Act of 1933.
c. Securities Exchange Act of 1934.
d. North American Free Trade Act.

27. (c) Under the Securities Exchange Act of 1934, issuers of securities registered under this Act must file quarterly reports (Form 10-Q) for the first three quarters of each fiscal year. The financial data in these may be unaudited; however, material misinformation is a violation of the 1934 Act. Answer (a) is incorrect—the Federal Trade Commission Act does not apply to this action. Answer (b) is incorrect because the Securities Act of 1933 applies to the initial issuance of securities and not to the secondary market of publicly traded securities. Answer (d) is incorrect because NAFTA is an agreement designed to promote free trade between the US, Mexico, and Canada.

28. The Securities Exchange Commission promulgated Rule lob-5 under Section 10(b) of the Securities Exchange Act of 1934. Which of the following is(are) purpose(s) of the Act?
To rate securities To encourage To deter
so investors disclosure of fraud.
can choose information involving
more wisely relevant to investors securities
No No Yes
No Yes Yes
Yes Yes Yes
Yes Yes No

28. (b) Purposes of Section 10(b) of the Securities Exchange Act of 1934 include deterring fraud in the securities industry and encouraging disclosure of relevant information so investors can make better decisions. The SEC does not rate the securities.

29. Integral Corp. has assets in excess of $4 million, has 350 stockholders, and has issued common and preferred stock. Integral is subject to the reporting provisions of the Securities Exchange Act of 1934. For its 2008 fiscal year, Integral filed the following with the SEC: quarterly reports, an annual report, and a periodic report listing newly appointed officers of the corporation. Integral did not notify the SEC of stockholder "`short swing" profits; did not report that a competitor made a tender offer to Integral's stockholders; and did not report changes in the price of its stock as sold on the New York Stock Exchange. Under SEC reporting requirements, which of the following was Integral required to do?
a. Report the tender offer to the SEC.
b. Notify the SEC of stockholder "short swing" profits.
c. File the periodic report listing newly appointed officers.
d. Report the changes in the market price of its stock.

29. (c) Under the Securities Exchange Act of 1934, issuers of securities registered under this Act must file annual and quarterly reports with the SEC. The company must also file current reports covering certain material events such as a change in the amount of issued securities, a change in corporate control, or a change in newly appointed officers. Answer (a) is incorrect because a competitor's making a tender offer need not be reported to the SEC.

30. Which of the following factors, by itself, requires corporation to comply with the reporting requirements Securities Exchange Act of 1934?
a. Six hundred employees.
b. Shares listed on a national securities exc
c. Total assets of $2 million.
d. Four hundred holders of equity securities.

30. (b) Securities must be registered with the SEC if they are traded on any national securities exchange. Securities must also be registered if they are traded in interstate commerce where the corporation has more than $10 million in assets and 500 or more shareholders.

31. The registration provisions of the Securities Ex Act of 1934 require disclosure of all of the following information except the
a. Names of owners of at least 5% of any class nonexempt equity security.
b. Bonus and profit-sharing arrangements.
c. Financial structure and nature of the business:
d. Names of officers and directors.

31. (a) The Securities Exchange Act of 1934 has registration provisions that require specified disclosures including bonus and profit-sharing arrangements, the financial structure and nature of this business, and names of officers and directors.

32. Under the Securities Act of 1933, which of the following statements is correct concerning a public issuer of securities who has made a registered offering?
a. The issuer is required to distribute an annual to its stockholders.
b. The issuer is subject to the proxy rules of the
c. The issuer must file an annual report (Form I with the SEC.
d. The issuer is not required to file a quarterly (Form 10-Q) with the SEC, unless a material occurs.

32. (c) Under the Federal Securities Act of 1933, which incorporates the filing requirements of the Federal Securities Exchange Act of 1934, the issuer must file with the SEC an annual report on Form 10-K. Answer (a) is incorrect because the issuer must file the annual report with the SEC but is not required to distribute it to its stockholders.

33. Which of the following persons is not an insider of corporation subject to the Securities Exchange Act of registration and reporting requirements?
a. An attorney for the corporation.
b. An owner of 5% of the corporation's outstanding debentures.
c. A member of the board of directors.
d. A stockholder who owns 10% of the outstanding common stock.

33. (b) Under the 1934 Act, insiders include officers and directors of the corporation as well as owners of 10% or more of the stock of the corporation. Accountants, attorneys, and consultants can also be insiders subject to further regulation under the 1934 Act. Creditors, that is, owners of debentures are not considered to be insiders.

34. The Securities Exchange Commission promulgated, Rule 10b-5 from power it was given the Securities Exchange Act of 1934. Under this rule, it is unlawful for any person to use a scheme to defraud another in connection with-the
Purchase of any security Sale of any security
a. Yes Yes
b. Yes No
c. No Yes
d. No No

34. (a) Under Rule lOb-5, it is unlawful to use schemes to defraud in connection with the purchase or sale of any security. Note that this rule was made from powers given the SEC under the Securities Exchange Act of 1934, which applies to purchases in addition to sales of securities.

35. The antifraud provisions of Rule 10b-5 of the Security Exchange Act of 1934
a. Apply only if the securities involved were regulated under either the Securities Act of 1933 01 Securities Exchange Act of 1934.
b. Require that the plaintiff show negligence on t part of the defendant in-misstating facts.
c. Require that the wrongful act must be accomplished through the mail, any other use of interstate commerce, or through a national securities exchange.
d. Apply only if the defendant acted with intent I fraud.

35. (c) For the Securities Exchange Act of 1934 to apply, including the antifraud provisions of Rule 10b-5, there must be shown a federal constitutional basis such as use of the mail, interstate commerce, or a national securities exchange. Answer (a) is incorrect because the antifraud provisions apply whether or not the securities had to be registered under either the 1933 Act or the 1934 Act.

36. Link Corp. is subject to the reporting provisions of the securities Exchange Act of 1934. Which of the following situations would require Link to be subject to the reporting provisions of the 1934 Act?
Shares listed on a More than one
nat'l securities xchange class of stock
a. Yes Yes
b. Yes No
c. No Yes
d. No No

36. (b) If the shares are listed on a national securities exchange, they are subject to the reporting provisions of the 1934 Act. There is no provision concerning a corporation owning more than one class of stock that by itself requires that it be subject to the reporting provisions of the 1934 Act.

37. Link Corp. is subject to the reporting provisions of the securities Exchange Act of 1934. Which of the following documents must Link file with the SEC?
Quarterly Reports Proxy
(Form 10-q) Statements
a. Yes Yes
b. Yes No
c. No Yes
d. No No

37. (a) Under the 1934 Act, Link must file with the SEC annual reports (Form 10-K), quarterly reports (form 10-Q), current reports (Form 8-K) of certain material events, and proxy statements when proxy solicitations exist.

38. Link Corp. is subject to the reporting provisions of the securities Exchange Act of 1934. Which of the following reports must also be submitted to the SEC?
Reports to any Report of proxy
party making a tender solicitations by
offer to buy Link Link stockholders
a. Yes Yes
b. Yes No
c. No Yes
d. No No

38. (a) When there is a proxy solicitation, Link must make a report of this to the SEC. Also, reports of tender offers to purchase securities need to be submitted to the SEC.

Which of the following events must be reported to the SEC under the reporting provisions of the SEC Act of 1934?
Tender offers Insider trading Soliciting proxies
a. Yes Yes Yes
b. Yes Yes No
c. Yes No Yes
d. No Yes Yes

39. (a) A tender offer is a request to the shareholders of a given company to tender their shares for a stated price. If the tender offer was unsolicited, the corporation must report this to the SEC under the reporting provisions of the Securities Exchange Act of 1934. Also, trading by insiders such as officers, directors, or shareholders owning at least 10% of the stock of a corporation registered with the SEC must also be reported to the SEC under the 1934 Act. Likewise, solicitation of proxies must be reported to the SEC.

40. Adler Inc is a reporting company under the SEC Act of 1934. The only security it has issued is voting common stock. Which of the following statements is correct?
a. Because Adler is a reporting company it is not required to file a registration statement under the SEC Act of 1933 for any future offerings of its common stock
b. Adler need not file its proxy statements with the SEC because it has only one class of stock outstanding
c. Any person who owns more than 10% of Adler's common stock must file a report with the SEC
d. It is unnecessary for the required annual report to include audited FS

40. (c) Under the Securities Exchange Act of 1934 which applies if interstate commerce or the mail is used, any purchaser of more than 5% of a class of equity securities must file a report with the SEC. Answer (d) is incorrect because the required annual report (Form 10-K) must be certified by independent public accountants. Answer (a) is incorrect because each company must also comply with the filing requirements under the Securities Act of 1933. Answer (b) is incorrect because there is no exemption from filing proxy statements simply because the company has only one class of stock.

41. Which of the following is correct concerning annual reports and quarterly reports.
a. Both forms 10K & 10Q must be certified by independent public accountants and both must be filed with SEC
b. Both forms must be certified by independent public accountants but neither need be filed with the SEC
c. Although both forms must be filed with the SEC, only form 10-k need be certified by independent public accountants
d. Form 10k must be certified by independent public accountants and must also be filed with the SEC, however, form 10q need not be certified by a public accountant nor filed with SEC

41. (c) Forms 10-K (annual reports) and 10-Q (quarterly reports) must be filed with the SEC. Forms 10-K containing financial statements must be certified by independent public accountants. However, this is not true of Forms 10-Q which cover the first three fiscal quarters of each fiscal year of the issuer.

42. Burk Corp has issued securities that must be registered with the SEC under the SEC act of 1934. A material event took place a week ago, that is, there was a change in the control of Burk Corp. Which is true?
a. Because of this event, Burk must file forms 10k & 10q with SEC
b. Because of the event, Burk is required to file from 8-k
c. Burk Corp need not file any forms with the SEC concerning this material event if the relevant facts are fully disclosed in the audited FS
d. Burk Corp need not file any form concerning the material event if Burk Corp has an exemption under rules 504, 505, 506 or regulation D

42. (b) When certain material events take place, such as a change in corporate control, the corporation covered under the 1934 Act must file Form 8-K, a current report, with the SEC within fifteen days after the material event occurs. Answer (a) is incorrect because Burk Corporation must file Forms 10-K, annual reports, and Forms 10-Q, quarterly reports, whether or not a material event has taken place. Answer (c) is incorrect because there is no such exception provided. Answer (d) is incorrect because Rules 504, 505, and 506 under Regulation D apply to the initial issuance of securities under the Securities Act of 1933 and do not relieve Burk Corporation from the filing requirements with the SEC under the 1934 Act.

43 Loop corp has made a major breakthrough in the development of a micro pencil. Loop has patented the product and is seeking to maximize the profit potential. In this effort, Loop can legally
a. Require its retailers to sell only Loop's products, including the pencils and not sell similar competing products
b. Require its retailers to take stipulated quantities of its other products in addition to the pencils
c. Sell the product at whatever price the traffic will bear even though Loop has a monopoly
d. Sell the product to its retailers upon the condition that they do not sell the pencils to the public for less than a stated price

43. (c) Government creation of monopoly status through a patent is permissible under the antitrust law as long as no other anticompetitive conduct is involved. Loop Corporation is, therefore, entitled to sell the micropencil at a price determined by the normal competitive forces of supply and demand. A patent grants the holder a twenty-year exclusive right to market the product. The twenty years starts at the application date. For design patents, the period is fourteen years.

Robinson's pricing policies have come under attack by several of its retailers. In fact, Patman, has instigated legal action against Robinson alleging that Robinson charges other favored retailers prices for its products which are lower than those charged to it, Patman's legal action against Robinson
a. Will fail unless Patman can show that there has been an injury to competition
b. Will be sufficient if the complaint alleges that Robinson charged different prices to different customers and there is a reasonable possibility that competition may be adversely affected
c. Is groundless since one has the legal right to sell at whatever price one wishes as long as the price is determined unilaterally
d. Is to be tested under the rule of reason and if the different prices charged are found to be reasonable, the complaint will be dismissed.

44. (b) The Robinson-Patman Act prohibits price discrimination in interstate commerce of commodities of like grade and quality. A violation of the act exists if the effect of the price discrimination may be to substantially lessen competition or tend to create a monopoly. Therefore, all that Patman must do to maintain a sufficient legal action is to allege that.due to Robinson's pricing activities there is a reasonable possibility that competition may be adversely affected. Answer (a) is incorrect because Patman does not have to show actual injury to competition; Patman must show that such discrimination may substantially lessen competition. Answer (c) is incorrect because Congress purposely adopted the Robinson-Patman Act to prevent unilateral price determination which has the resultant effect of lessening competition or tending to create a monopoly.

What is a security?

A tool used to make a profit on the investment through the efforts of others (NOT A CD, which does not involve the efforts of others)

What is a tombstone advertisement?

Informs potential investors that a prospectus is available

When are notes exempt from registration?

If the maturity is <6 months
Commercial uses (not investment)
$ amount irrelevant
Exempt securities are STILL subject to antifraud provisions

The securities of which companies are exempt?

Savings and loans, Gov't & Charity

What does regulation A require?

Issuer must file offering circular w/SEC. Audited F.S. are not needed

What does regulation D require?

Seller must notify SEC within 15 days after first sale of offering
Cant make general advertisements

When are offerings exempt?

If offeror is a S&L, Gov't or charity
It is a not with a maturity <9 months for commercial uses
500s exemptions
Intrastate offerings
80 % of business must be in state
Only sold and marketed within state
Resale only allowed within state and after 9 months

When must securities be registered?

If publicly traded on a nat'l exchange
Interstate commerce with >$10 bil assets, >500 shareholders

What is contained in the 10Q?

Must contain unaudited F.S. free of material misstatement
Disclosure of profit sharing
financial structure, business nature, officers, directors

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