Q&A Hero

Q: Which of the following statements is true of the statute of limitations? A. The defense mechanism is inapplicable in cases of civil liability. B. The basic period for the statute of limitation is one year. C. The statute of limitation begins even before the discovery of untrue statement or omission. D. A suit may be brought in any event even after five years of sale. E. The statute of limitation excludes reasonable diligence in discovering untrue statement or omission.

Q: Due diligence defense requires that an expert prove that a reasonable investigation of the financial statements of the issuer and ______ was conducted. A. sellers B. bailees C. underwriters D. controlling persons E. guarantors

Q: Which of the following sections of the Securities Act of 1933 deals with imposing liability on fraudulent interstate transactions? A. Section 12 B. Section 11 C. Section 17 D. Section 4 E. Section 16

Q: Which of the following statements is true of the Securities Exchange Act of 1934? A. The Act makes it legal to sell a security on a national exchange. B. The registration under the 1934 Act is the same as under the 1933 Act. C. The registration process excludes filing of prescribed forms with the Securities Exchange Commission. D. The Act deals with original offerings of securities instead of regulating transfers of securities after the initial sale. E. The Act requires brokers and dealers to keep detailed records of their activities and filing of annual reports with the Securities Exchange Commission.

Q: The ______ regulates transfers of securities after the initial sale. 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: ______ are brief announcements identifying the security and stating its price, by whom orders will be executed, and from whom a prospectus may be obtained. A. Tombstone ads B. Institutional ads C. Coupon ads D. Adjunct ads E. Overlay ads

Q: In the registration process, the waiting period typically lasts A. 10 days. B. 20 days. C. 30 days. D. 45 days. E. 60 days.

Q: According to the Securities Act of 1933, which of the following is illegal during the waiting period? A. Soliciting buyers for a companys securities B. Receiving offers to buy a companys securities C. Selling securities subject to the act D. Soliciting through the use of a summary prospectus E. Soliciting offers for later acceptance

Q: According to the Securities Act of 1933, which of the following is considered legal during the prefiling period? A. selling a covered security B. engaging in negotiations and agreements with underwriters C. offering to sell a covered security D. offering to buy a covered security E. sellers soliciting offers for later acceptance

Q: Which of the following statements is true of a seller? A. It refers to anyone who contracts with a purchaser or who is a motivating influence that causes the purchase transaction to occur. B. It refers to the individual or business organization offering a security for sale to the public. C. It refers to anyone who prepares the registration statement and prospectus for securities involved in a sale. D. It refers to a person who is in possession of an article and is responsible for returning the article safely to the owner once the contract is fulfilled. E. It refers to anyone who controls or is controlled by the issuer, such as a major stockholder of a corporation.

Q: A major stockholder of a corporation is most likely to be a(n) ______ in the initial sale of securities who also has power over the issuer in such sales. A. seller B. bailee C. underwriter D. guarantor E. controlling person

Q: Which of the following statements is true of the various activities occurring during the registration process of securities in a sale? A. A registration becomes ineffective and invalid immediately at the expiry of the waiting period. B. Contracts to buy and sell securities are finalized during the posteffective period. C. It becomes legal to sell a security subject to the act during the waiting period. D. During the prefiling period, offers to sell and buy securities are permitted as per the Securities Act of 1933. E. Tombstone ads are made after the end of the posteffective period.

Q: A prospectus is filed during the A. prefiling period. B. waiting period. C. pre-effective period. D. posteffective period. E. elimination period.

Q: Tombstone ads refer to A. solicitations made during the waiting period. B. notices filed during the posteffective period announcing that the sale of securities has ended. C. announcements issued by the Securities and Exchange Commission (SEC) warning potential investors that a company is being investigated for fraud. D. feedback from the Securities and Exchange Commission (SEC) requiring additional information or a clarification of supplied information needed to complete a filed registration statement. E. statements that are required to be filled with the Securities and Exchange Commission (SEC).

Q: According to the Securities Act of 1933, an individual who participates in the original distribution of securities by selling such securities for the issuer or by guaranteeing their sale is referred to as the A. seller. B. controlling person. C. issuer. D. underwriter. E. bailee.

Q: The ______ is a disclosure law which makes it illegal to use mails or any other means of interstate communication or transportation to sell securities without disclosing certain financial information to potential investors. 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: The registration statement to be filed with the Securities and Exchange Commission (SEC) includes A. statements which allow the holder to buy securities at a specified price within a designated time limit. B. a written promise to repay a specified sum of money plus interest at a specified rate and length of time to fulfill the promise. C. statements that show ownership of a bond, stock or other security. D. an annual report on the activities of an organization distributed among its stakeholders. E. a detailed disclosure of financial information about the issuer and the controlling individuals involved in the offering of securities for sale to the public.

Q: After the registration statement is filed, a ______ commences. A. deferring period B. prefiling period C. posteffective period D. waiting period E. regulation period

Q: According to the Securities Act of 1933, an issuer of securities who complies with the federal law must prepare a(n) A. issuers statement. B. registration statement. C. licensing agreement. D. statute of limitations. E. secured promissory note.

Q: According to the Securities Act of 1933, a(n) ______ is the individual or business organization offering a security for sale to the public. A. seller B. controlling person C. issuer D. underwriter E. financial sponsor

Q: The Securities and Exchange Commissions (SECs) adoption of rules and regulations relating to financial and other information furnished to the Commission comes under its ______ power. A. quasi-judicial B. federal C. quasi-executive D. quasi-legislative E. bargaining

Q: Under the Sarbanes-Oxley Act of 2002, whistleblowers exclude contractors.

Q: Which of the following is a major provision of the State blue sky laws? A. They impose another level of securities regulations and govern interstate securities transactions that are beyond federal laws. B. They relax some of the regulatory burden for investments in smaller businesses or start-ups. C. They provide protection of whistleblowers who reveal fraud. D. They reformed the Federal Reserve. E. They created the Public Company Accounting Oversight Board.

Q: Which of the following Acts created the Securities and Exchange Commission? A. the Securities Act of 1933 B. the Securities Exchange Act of 1934 C. the Securities Enforcement Remedies Act of 1990 D. the Sarbanes-Oxley Act of 2002 E. the Insider Trading and Securities Fraud Enforcement Act of 1988

Q: The Securities and Exchange Commissions (SEC) right to conduct investigations is based on its A. quasi-executive power. B. federal power. C. quasi-judicial power. D. constitutional right. E. quasi-legislative power.

Q: Restatements of financial reports have risen in number as a result of the Sarbanes-Oxley Act because companies have made efforts to maintain appropriate compliance with the law.

Q: Under the Sarbanes-Oxley Act, whistleblowers that suffer retaliation are able to recover civil damages and can be reinstated if terminated improperly.

Q: The Consumer Financial Protection Board was established under the Dodd-Frank Act.

Q: Title II of the Jumpstart Our Business Startups (JOBS) Act of 2012 prohibits companies to advertise or share publicly that they are seeking investments.

Q: The Sarbanes-Oxley Act provides protections for whistleblowers so that individuals are more willing to report the corruption that can lead to major scandals.

Q: Congress, through the Public Company Accounting Oversight Board (PCAOB), limits the amount of damages private plaintiffs can recover and restricts attorney fees.

Q: The blue sky laws can apply to securities subject to federal laws as well as to those securities exempt from the federal statutes.

Q: The Uniform Securities Act has been the model for blue sky laws since 1956.

Q: The Public Company Accounting Oversight Board (PCAOB) permits auditing firms to conduct a variety of nonauditing services.

Q: The Sarbanes-Oxley Act focuses on decreasing the independence of the auditors.

Q: The Sarbanes-Oxley Act limits personal loans from a company to its executives to one loan of no more than $10,000, amortized over five years, at a time.

Q: A tippee is liable for trading or passing on information that is public.

Q: Proof of negligence leading to corporate mismanagement is enough to prove a case of sellers fraud under Rule 10b-5.

Q: An insider is a person who owns at least 75 percent of a security.

Q: The Securities and Exchange Commission (SEC) applies the misappropriation theory of insider trading to force executives who file or certify incorrect financial statements to return bonuses and additional compensation received.

Q: The burden of proof when alleging a due diligence defense is on the expert.

Q: Under the 1933 Act, the basic period of the statute of limitations starts to run even before the discovery of the untrue statement or omission.

Q: The Securities Exchange Act makes it illegal to sell a security on a national exchange unless a registration is effective for the security.

Q: A plaintiff in a Rule 10b-5 suit is required to prove damages in order to prevail.

Q: A defrauding seller usually benefits from an increase in the value of the securities.

Q: Fraud occurs when any material fact is omitted from a prospectus causing a statement to be misleading.

Q: Liability traditionally has been imposed against violators even though they lacked any wrongful intent.

Q: Under Section 11, the plaintiff has to prove reliance on the false or misleading prospectus or communication.

Q: Plaintiffs can recover for harm done by false or misleading information in a prospectus even if the prospectus is not read or reviewed.

Q: The Sarbanes-Oxley Act has increased the statute of limitations for various infringements of both the 1933 Act and the 1934 Act.

Q: A prospectus must conform to the statutory requirements.

Q: The law prohibits the sale of worthless securities.

Q: It is legal to sell a covered security during the prefiling period.

Q: The information contained in a prospectus is completely different from that contained in a registration statement.

Q: The Federal Trade Commission prevents wrongful actions by the use of cease and desist orders.

Q: Securities laws are designed to give potential investors sufficient information so that they can make intelligent investment decisions based on factual information.

Q: The Securities and Exchange Commission has both quasi-legislative and quasi-judicial powers.

Q: The Securities Act of 1933 is a disclosure law with respect to the initial sale of securities to the public.

Q: In the context of providing untrue or misleading information to potential investors, proof of negligence will support an injunction.

Q: The Robinson-Patman amendment extends only to transactions in intrastate commerce.

Q: Tying arrangements do not violate the Sherman Act.

Q: Any property owned in violation of Section 1 of the Sherman Act that is being transported from one state to another is subject to a seizure by and forfeiture to the United States.

Q: It is just as illegal to receive the benefit of price discrimination as it is to give a lower price to one or two buyers.

Q: Concerted activities are illegal as they are always harmful to the society.

Q: Some monopolies are lawful.

Q: Section 2 of the Sherman Act does not regulate attempts to monopolize any part of interstate or foreign commerce.

Q: Crimes under the Sherman Act are felonies.

Q: The burden of proof to enjoin an activity is greater than the burden of proof to convict someone of a crime.

Q: Resale price maintenance is legal only if there is no coercion or pressure other than the announced policy and its implementation.

Q: Conduct directed at price stabilization is per se anticompetitive.

Q: Territorial arrangements within channels of distribution are analyzed under the rule of reason.

Q: The mere exchange of price information among competitors is likely to constitute a Sherman Act violation.

Q: Maximum-price agreements are just as illegal as minimum-price agreements.

Q: Attempting to determine the price of services through the use of relative-value scales is a legal method for controlling prices.

Q: Horizontal price fixing is not illegal per se under the Sherman Act.

Q: It now appears the Supreme Court is comfortable limiting the per se illegality analysis to vertical agreements among competitors.

Q: According to the per se rule, price fixing is illegal only when the parties to the price fixing agreement have control of a market.

Q: Agreements falling within the per se category have such a pernicious effect on competition that elaborate inquiry as to the precise harm they may cause or a business excuse for them is unnecessary.

Q: Courts develop the distinction between rule of reason and per se illegality on a case-by-case basis.

Q: Sherman Act cases need not satisfy an interstate commerce element to be constitutionally valid.