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BUL 3330 Unit XI

Terms in this set (24)

The Securities Act of 1933 is known as the "Truth in Securities" law.
TRUE
The Securities Exchange Act of 1934 applies to corporations whose equity securities are traded over the counter if the company has at least $10 million in assets and 500 or more shareholders.
TRUE
The Securities Exchange Act of 1934 does not require disclosures when control of a company is being sought through a tender offer.
TRUE
Under the Securities Act of 1933, the SEC has the power to issue a stop order to halt trading in the stock, even after the securities have gone on sale.
TRUE
The SEC's fundamental mission is to assure adequate disclosures in connection with the extension of consumer credit.
FALSE
The Securities Act of 1933 authorized the establishment of the Securities and Exchange Commission.
FALSE
The Securities Exchange Act of 1934 is known as the "Truth in Securities Law."
FALSE
The Securities Act of 1933 does not apply to unincorporated entities.
FALSE
If a company engages in exclusively intrastate business, the federal securities laws will not apply.
FALSE
For the purposes of defining a security, the U.S. Supreme Court has stated the following: "The test is whether the scheme involves an investment of money in a common enterprise with profits to come solely from the efforts of others." In connection with the definition of a security, which of the following is true?
The fact that investors are required to exert some efforts if a return is to be achieved does not automatically preclude a finding that a scheme is a security.
The Securities Act of 1933
Is limited to new securities issues
On February 15, Donald, a director of the Mickey Mouse Corporation, purchases 1,000 shares of Mickey Mouse for $50 a share. On June 1, Donald sells the shares for $60 a share. What result?
Donald must pay back the $10,000 profit even if he had no inside information.
The U.S. Supreme Court has refined Rule 10b-5 in the following manner:
Before a tippee has a duty to disclose or abstain from trading, there must be a breach of the insider's fiduciary duty.
Which of the following is false?: The Securities and Exchange Commission (SEC) is composed of ten members; The SEC was created by Congress; The SEC has the power to issue subpoenas; The SEC is bipartisan: not more than three commissioners may be from the same political party.
The Securities and Exchange Commission (SEC) is composed of ten members.
____ State securities regulation statutes
Blue Sky Laws
____ Applies to new securities issues
Securities Act of 1933.
____ Applies to trading in the secondary market
Securities Exchange Act of 1934
____ Independent regulatory agency that investigates complaints or violations of law in securities transactions
Securities and Exchange commission
____ Provides for recapture of short-swing profits made by corporate insiders
Section 16(b)
____ Held that proof of scienter is required in private damage actions under Rule 10b-5
Ernst & Ernst v. Hochfelder
____ Federal law passed in response to bribery of foreign officials by American companies
Foreign Corrupt Practices Act
____ SEC rule providing that a person who has inside information about a tender offer must either disclose the information or refrain from trading
Rule 14e-3
____ Prohibits the use of any scheme, device or artifice to defraud in connection with the sale or purchase of any security
Rule 10b-5
____ Used by courts in insider trading cases to hold noninsiders liable for misappropriating information from employers
misappropriation theory
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