Q&A Hero

Q: The Consumer Financial Protection Bureaus authority applies to A. businesses regulated by the Securities and Exchange Commission. B. Internet service providers. C. persons regulated by the Securities and Exchange Commission. D. insurance companies. E. banks that extend credit loans.

Q: Which of the following acts establishes procedures that banks and other financial institutions must follow when consumers dispute amounts billed by a bank? A. the Electronic Fund Transfer Act B. the Fair Credit Reporting Act C. the Magnuson-Moss Warranty Act D. the Federal Trade Commission Act E. the Equal Credit Opportunity Act

Q: Which of the following statements is true of the Fair Debt Collection Practices Act? A. It permits debt collectors to contact a third party, even if an attorney representing a debtor responds to all communications by the collector. B. It permits debt collectors to contact third parties; the collectors must disclose that they are pursuing a debt against a consumer but may not disclose the nature or amount of the debt. C. It permits debt collectors to contact third parties; the collectors must disclose that they are pursuing a debt against a consumer and may also disclose the nature or amount of the debt. D. It forbids debt collectors from contacting third parties regardless of the disclosure or nondisclosure of the existence of a consumers debt. E. It permits debt collectors to contact third parties, but the debt collector may not state that the consumer owes a debt.

Q: The ______ requires that a lender disclose the finance charge, expressing it as an annual percentage rate, and specifies the methods for making this computation. A. Equal Credit Opportunity Act B. Truth-in-Lending Act C. Fair Credit Reporting Act D. Magnuson-Moss Warranty Act E. Fair Debt Collection Practices Act

Q: The ______ is the sum of all charges payable directly or indirectly by the debtor or someone else to the creditor as a condition of the extension of credit. A. annual percentage rate B. funding charge rate C. commercial charge D. service charge E. finance charge

Q: Among the costs frequently paid by debtors to creditors as a condition of the extension of credit, which of the following are included in the finance charge? A. title insurance fees B. abstract fees C. attorneys fees for preparing deeds D. notary fees E. fees for appraisals

Q: The Truth-in-Lending Act gives debtors the right to rescind certain transactions for a period of ______ business days from the date of the transactions or from the date they are given the notice of their right to rescind, whichever is later. A. seven B. eight C. three D. nine E. five

Q: Which of the following statements is true of the penalties and remedies under the Truth-in-Lending Act? A. There are no criminal penalties for violation of the Truth-in-Lending Act. B. The criminal liability provisions make creditors liable to debtors for an amount equal to thrice the finance charge. C. The civil liability provisions may allow creditors to be liable to debtors for an amount neither less than $4,000 nor more than $40,000 for a closed-end real estate transaction. D. Creditors may avoid liability in the event they make an error, provided they notify a debtor within sixty days after discovering the error and also correct the error. E. Creditors, in certain cases, may be allowed to collect finance charges in excess of those actually disclosed.

Q: Subprime mortgages refer to mortgages securing loans for consumers A. at an interest rate lower than the prime interest rate established by the Federal Reserve Bank. B. who own property that cannot pass a reasonable safety inspection. C. with excellent credit worthiness at a lower than ordinary market rate. D. who do not qualify for ordinary market rates due to a lack of credit worthiness. E. with excellent credit worthiness at a zero rate of interest.

Q: If there are violations of the Equal Credit Opportunity Act (ECOA), affected consumers A. have the right to file a petition to the president to seek some form of remedy. B. can recover punitive damages only in the presence of actual damages. C. can recover punitive damages up to $100,000. D. have the right to seek public enforcement by the Federal Trade Commission. E. have to depend on the government to ensure they have equal opportunities for credit as they cannot pursue private remedies.

Q: The ______ provision of the Fair Credit Reporting Act requires that consumers who are seeking credit for personal, family, or household purposes be informed if their application is denied because of an adverse credit report. A. server B. subscriber C. access D. content E. user

Q: ______ are reports on a consumers character, general reputation, mode of living, and so on, obtained by personal interviews in the consumers community. A. Credit reports B. Consumer policy reports C. Market research reports on consumers D. Arbitrative consumer relations reports E. Investigative consumer reports

Q: Under the Fair Credit Reporting Act (FCRA), investigative consumer reports detailing a consumers character, general reputation, and mode of living A. may be obtained without any restriction should the consumer apply for a credit, an insurance, an accounting, or a finance-related job. B. may be obtained by no one unless at least three days advance notice is given to the consumer that such a report will be sought. C. can be sought only with the permission of the Federal Trade Commission. D. are prohibited because they are not credit-related issues. E. are prohibited because they violate the right to privacy of the consumer.

Q: DN Corp. is a credit reporting agency. DN Corp. furnishes an investigative consumer report about Nicole, a candidate, who is seeking employment at Zenith Corp., a financial institution. Nicole is given a weeks notice that such a report will be generated by DN Corp. as part of Zeniths hiring process. DN Corp. follows reasonable procedure when collecting information about Nicole. However, Nicole realizes that the report contains false information about her. In this scenario, which of the following is most likely to be true? A. Nicole can sue DN Corp. for furnishing false information as it violates the Fair Credit Reporting Act. B. Nicole can sue Zenith Corp. for requesting an investigative consumer report. C. Nicole cannot file a libel action against DN Corp. for furnishing false information regardless of whether the investigative procedures were reasonable or not. D. DN Corp. is not liable to Nicole as it followed reasonable procedures. E. DN Corp. is protected by the Fair Credit Reporting Act against any liability regardless of whether the investigative procedures were reasonable or not.

Q: The Fair Credit Reporting Act applies to anyone who prepares or uses a credit report in connection with A. opening a bank account. B. promoting an employee. C. selling real estate. D. granting a business license. E. extending credit.

Q: Which of the following statements is true of the limitation of the Fair Credit Reporting Act? A. If a bank passes along any information it received from an outside source about its customer, then its credit report is not covered by the act. B. If a bank reports only as to its own experiences, it would come under the act. C. If a bank furnishes information about a customer related to its transactions, it would come under the act. D. If a bank passes on information it collected from credit reporting agencies that used several sources, it would not come under the act. E. If a bank gave its opinion as to the creditworthiness of a customer in question, it would come under the act.

Q: Private remedies for violation of the Equal Credit Opportunity Act include recovery of punitive damages up to ______. A. $100,000 B. $50,000 C. $10,000 D. $20,000 E. $500,000

Q: Infro Inc. is a major lender. It plans to include the zip codes of its customers as a major factor when offering loans. This allows Infro to reduce the amount of risk it takes by not providing loans in certain areas where property values are low. In this case, which of the following statements is true? A. Before Infro implements its decision, it must obtain permission from the Federal Trade Commission to do so. B. If Infro goes through with its decision, it is engaging in redlining. C. The decision of Infro is legal under the provisions of the Equal Credit Opportunity Act. D. Before Infro implements its decision, it must specify the minimum average property value a person must have before applying for a loan. E. If Infro goes through with its decision, it is engaging in inclusionary zoning which is legal.

Q: Which of the following statements is true of redlining? A. It refers to the practice in which real estate brokers guide prospective home buyers toward or away from certain neighborhoods based on their race. B. It refers to the perceived business practice of a company providing a product or a service based on the customer lifetime value. C. It refers to a way of encouraging white owners of property to sell their houses at a loss by implying that racial minorities were moving into their previously racially segregated neighborhood, thus depressing real estate property values. D. It refers to an organization targeting its minority consumers by charging them more for services or products when compared to the charges for its non-minority consumers. E. It refers to the refusal of an organization to make loans at all in certain areas where property values are low.

Q: The Equal Credit Opportunity Act is aimed especially at preventing ______. A. race discrimination B. age discrimination C. sex discrimination D. marital status discrimination E. religion discrimination

Q: Which of the following acts purpose is to prevent discrimination in credit extension? A. the Federal Trade Commission Act B. the Fair Credit Reporting Act C. the Truth-in-Lending Act D. the Fair Debt Collection Practices Act E. the Equal Credit Opportunity Act

Q: Big Prime Inc. is a leading investment bank. Big Prime lends money to more men than women as it believes men are more likely to pay back their loans. In this case, Big Prime violates the ______. A. Federal Trade Commission Act B. Fair Credit Reporting Act C. Truth-in-Lending Act D. Fair Debt Collection Practices Act E. Equal Credit Opportunity Act

Q: BrightCave is a local retail store that regularly extends credit to its customers. William, an African American, is denied credit by the store. He believes that the store has discriminated against him based on his race. In this scenario, BrightCave violates the ______. A. Federal Trade Commission Act B. Fair Credit Reporting Act C. Equal Credit Opportunity Act D. Fair Debt Collection Practices Act E. Truth-in-Lending Act

Q: DrakeAuto Corp. is an automobile dealer that offers flexible payment plans for its customers. However, DrakeAuto requires its customers over 60 years of age to make the payment in full. In this case, DrakeAuto violates the ______. A. Federal Trade Commission Act B. Equal Credit Opportunity Act C. Truth-in-Lending Act D. Fair Debt Collection Practices Act E. Fair Credit Reporting Act

Q: What are the provisions under Title II and Title III of the Jumpstart Our Business Startups (JOBS) Act of 2012?

Q: State the new or proposed rules issued by the Securities and Exchange Commission (SEC) post the revitalization process initiated by the Sarbanes-Oxley Act of 2002.

Q: Under the Sarbanes-Oxley Act, list the types of services that auditing firms are prohibited from providing to companies.

Q: What contributions does the Sarbanes-Oxley Act make in the area of corporate governance?

Q: What provisions have been made by the Sarbanes-Oxley Act to provide protection for whistleblowers?

Q: What are the four common exemptions from blue sky laws that have been identified?

Q: What are the three different forms of registration that apply to a states application of blue sky laws?

Q: What is the misappropriation theory?

Q: What was the purpose of the Private Securities Litigation Reform Act of 1995? What are some of the provisions of the Act?

Q: How does the Securities Exchange Act of 1934 address the issue of insider transactions?

Q: Who is a tippee?

Q: What is the difference between Section 18 of the 1934 Act and Sections 11 and 12 of the 1933 Act with regard to liability in case of fraud?

Q: What are the criminal penalties incorporated by the Congress for violating the Securities Exchange Act of 1934?

Q: What are the common issues regarding litigation under Section 10(b) and Rule 10b-5 of the Securities Exchange Act of 1934?

Q: Explain the concept of fraud under Section 10(b) of the Securities Exchange Act of 1934.

Q: What does Section 12 of the Securities Act of 1933 deal with?

Q: What must an expert prove to successfully present the defense of due diligence?

Q: Materiality is one of the several defenses that is recognized by the Securities Act of 1933 and may be used to avoid civil liability. Explain materiality.

Q: Explain the term waiting period with regard to the registration of securities.

Q: What is the statute of limitations under Securities Act of 1934?

Q: What is the civil liability under the Securities Act of 1933? Which sections of the Act directly apply to civil liability?

Q: Who is liable under the Section 11 civil liability provision dealing with registration statements?

Q: What are tombstone ads and when do they occur?

Q: What are the three questions that a court will seek to answer when determining whether a person has purchased a security?

Q: What are the sanctions recognized by the 1933 Securities Act in case of untrue or misleading information being provided to a potential investor?

Q: Parties who are involved with or who promote the initial sale of securities fall into one or more of four roles. Mention these roles.

Q: When is a prospectus issued? What is its purpose and what has the Securities and Exchange Commission (SEC) specified as requirements to be contained in the prospectus?

Q: According to the Sarbanes-Oxley Act, auditors are required to preserve audit records for a period of A. three years. B. five years. C. two years. D. nine years. E. seven years.

Q: The Sarbanes-Oxley Act provides that whenever there is a restatement of the companys financial condition, then the executives A. would be morally rather than legally culpable for the bonuses paid as a result of the incorrect financial statements. B. have to forfeit their salaries to cover for the amount of the bonuses paid to them on the basis of incorrect financial statements. C. would not be legally bound to return any bonuses paid as a result of the incorrect financial statements. D. must return the interest on any incentives payments as a result of the incorrect financial statements. E. must return any bonuses paid as a result of the incorrect financial statements.

Q: Which of the following statements is true of the Sarbanes-Oxley Act? A. The act can apply to international companies if they are registered with the Securities and Exchange Commission (SEC). B. The act focuses on lessening the responsibilities of the auditors. C. The act requires the auditors to have a close working relationship with the companys CFO, accounting staff, and other company officials. D. The act is inapplicable to public companies. E. The act mandates the certification of internal financial controls.

Q: The Financial Stability Oversight Council was established by the A. Securities Exchange Act of 1934. B. Sherman Antitrust Act of 1890. C. Sarbanes-Oxley Act of 2002. D. Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010. E. Securities Act of 1933.

Q: Registration by notification A. is required by those issuers who lack a proven record and who are beyond the scope of Securities Act of 1933. B. refers to documents filed with the Securities & Exchange Commission (SEC) by a privately held company, declaring its intent to offer shares of its stock to the general public. C. is required for those issuers of securities who must register with the Securities and Exchange Commission (SEC) and the duplicate documents are filed with the states administrative agency. D. refers to the quality certification process in which an independent and accredited quality auditor conducts an on-site audit of a firm. E. allows issuers to offer securities for sale automatically after a stated time period expire unless the administrative agency takes action to prevent the offering.

Q: Which of the following statements is true of blue sky laws? A. The federal laws preempt the existence of state blue sky laws. B. The method of regulation is uniform and same across all the states. C. The laws can apply to securities subject to federal laws as well as to those securities exempt from the federal statutes. D. The laws are commonly known as the antifraud laws as per the Securities Act of 1934. E. The laws were established as a result of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010.

Q: The members of the Public Company Accounting Oversight Board are appointed by the A. president. B. senate. C. Federal Trade Commission. D. congress. E. Securities and Exchange Commission.

Q: The Public Company Accounting Oversight Board was created by the A. Securities Act of 1933. B. Securities Exchange Act of 1934. C. Security Fraud Enforcement Act. D. Sarbanes-Oxley Act. E. Sherman Act.

Q: ______ of the Sarbanes-Oxley Act requires CEOs and CFOs to certify the accuracy of the quarterly and annual financial statements filed with the Securities Exchange Commission. A. Section 906 B. Section 1107 C. Section 302 D. Section 802 E. Section 404

Q: Which of the following statements is true of the Private Securities Litigation Reform Act (PSLRA)? A. It was enacted by the Congress to eliminate the fraud-on-the-market presumption. B. It is used by the Congress to limit the amount of damages private plaintiffs can recover and restrict attorney fees. C. It usually fails to give provisions for requirements for the appointment of lead plaintiffs in securities class-action cases. D. It requires that private plaintiffs who suffered injury could maintain private causes of action against third parties not directly responsible for a securities law violation. E. It mandated that the Federal Trade Commission could pursue claims against third parties that are indirectly responsible for a securities law violation.

Q: The process of registration created by the Uniform Securities Act is known as A. registration by coordination. B. registration by notification. C. registration by qualification. D. registration by pronouncement. E. registration by announcement.

Q: Which of the following statements is true of the Securities Enforcement Remedies Act? A. An individual found to have violated the securities laws may be prohibited by the court from serving as an officer or director of a business organization. B. Civil fines of up to $700,000 per organization and $500,000 per individual may be imposed and collected by the courts. C. It changes membership requirements of corporate audit committees. D. It requires proof of criminal violation for individual and organizational fines to be imposed. E. It refrains from imposing liability on a theory of fraud on any person who shall make or cause to be made any false or misleading statements.

Q: Under the 1934 Act, a business organization found guilty of filing false or misleading documents with the Securities and Exchange Commission (SEC) may be fined up to A. $80,000,000. B. $55,000,000. C. $25,000,000. D. $50,000,000. E. $70,000,000.

Q: Under the 1934 Act, an individual found guilty of filing false or misleading documents with the Securities and Exchange Commission (SEC) may be imprisoned up to A. 5 years. B. 10 years. C. 15 years. D. 20 years. E. 25 years.

Q: According to the Securities and Exchange Commission (SEC), a person should be considered to be a temporary insider if that person conveys nonpublic information that was to have been kept confidential. This philosophy has become known as the A. quasi-insider theory. B. implied-insider theory. C. temporary insider theory. D. misappropriation theory. E. mosaic theory.

Q: The civil penalty provided by the Insider Trading and Securities Fraud Enforcement Act of 1988 for profits gained with nonpublic information is A. two years imprisonment. B. return of illegal profits gained. C. a recovery of double damages. D. three times the profits gained. E. a release of an equity court summons.

Q: Which of the following statements is true of creating liabilities under Section 18? A. There is a liability under section 18 for simple negligence. B. The plaintiff in a Section 18 case must prove reliance on the false or misleading filing of documents. C. Inaccuracy of filing is sufficient to impose liability under Section 18. D. The defendants good faith is considered a defense under Section 18. E. Freedom from fraud is an invalid defense under an action based on Section 18.

Q: Which of the following statements is true of the criminal liability imposed as per the Securities Act of 1934? A. Criminal liability is inapplicable in cases of false material statements in applications or reports. B. Individuals found guilty of filing misleading documents are subject to maximum two years of imprisonment. C. Individuals guilty of securities fraud may face a prison sentence of up to 25 years. D. Business organizations found guilty of filing misleading documents have relaxed laws in comparison to individuals. E. Regulating and imposing liabilities on trading on nonpublic information is beyond the scope of the act.

Q: The Insider Trading and Securities Fraud Enforcement Act of 1988 provides that suits alleging illegal use of nonpublic information may be filed up to a maximum period of ______ years after the wrongful transaction. A. six B. ten C. eight D. five E. seven

Q: Section 10(b) and Rule 10b-5 are usually referred to as the ______ provisions of the 1934 Act. A. civil B. discretionary C. general duties D. antifraud E. rulemaking

Q: The Sarbanes-Oxley Act requires that information pertaining to an insiders transaction be filed A. by mail, postmarked within five business days of the transaction. B. electronically within two business days of the transaction. C. by any effective means within 10 business days of the transaction. D. by any effective means within 10 business days after the close of the calendar month in which the transaction occurred. E. electronically on the day of the transaction.

Q: Prohibitions against insiders from engaging in short-swing profits are enforced by the A. Securities and Exchange Commission (SEC). B. Federal Trade Commission (FTC). C. Federal Reserve. D. issuer of the security or by a person who owns a security of the issuer. E. executive officers, accounting officers, and chief financial officers.

Q: An insider is any person who owns more than ______ percent of any security. A. 65 B. 10 C. 15 D. 20 E. 50

Q: Which of the following statements is true of short-swing profits? A. Short-swing profits refer to any profits made by insiders who buy and sell company stock within a three-month time period. B. The short-swing profits rule of Section 16 depends on misuse of information. C. Short-swing profits refer to those profits that have been made within a six-month time period. D. The short-swing profits policy takes into consideration order of purchase and sale in determining its legality. E. Short-swing profits are calculated on the highest price in and the lowest price out during any fiscal period.

Q: Benefit of the bargain refers to the measure of damages awarded to the buyer which is A. the amount that allows the injured party to revive the economic position held by him or her when the contract was made. B. the out-of-pocket expense such as the legal fees incurred by the plaintiff. C. the value of the security that was represented to be worth in the market. D. the combination of the out-of-pocket expenses and what the security was represented to be worth in the market. E. the difference between what he or she paid and what the security was represented to be worth.

Q: A(n) ______ is a person who learns of nonpublic information from an insider, and is generally viewed as a temporary insider. A. underwriter B. controlling person C. issuer D. tippee E. dealer

Q: Under Rule 10b-5, plaintiffs are entitled to A. contemptuous damages. B. consequential damages. C. aggravated damages. D. restitutionary damages. E. punitive damages.

Q: The buyers damages of a defrauded purchaser of securities A. are measured at the time of purchase. B. include a punitive amount to discourage further fraud. C. are measured at the time when the fraud is discovered. D. are considered sunk costs and irrecoverable. E. include speculative damages.

Q: ______ refers to the intent of a defendant-seller to deceive or mislead. A. Handhabend B. Double jeopardy C. Per minas D. Mens rea E. Scienter