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Exam 28: Investor Protection and Corporate Governance

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Question 21

True/False

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Most private,midsize-business,noninvestment company offers of securities are exempt from the registration requirements.

A) True
B) False

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Question 22

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HVAC Heating & Air Conditioning,Inc. ,is a public company whose shares are traded in the public securities markets.Under the Sarbanes-Oxley Act of 202,to ensure that HVAC's financial results are accurate and timely,the firm's senior officers must set up and maintain​

A) internal "disclosure controls and procedures."
B) external "release and reveal timetables."
C) personal "peruse and review liability policies."
D) public "information and discussion forums."

E) B) and C)
F) C) and D)

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Question 23

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Bonds & Stocks Corporation,and its officers,directors,and shareholders,buy and sell securities.SEC Rule 10b-5 applies to the purchase or sale of​

While the Securities and Exchange Commission reviews a registration statement for completeness,the securities can be offered for sale but not sold.

The Securities and Exchange Commission does not regulate the content of proxy statements.

The Sarbanes-Oxley Act of 202 attempts to increase corporate accountability by imposing strict disclosure requirements and harsh penalties for securities laws.

Fact Pattern 28-2 Ben,an accountant for AirLift,Inc. ,a ride service,learns of undisclosed company plans to distribute a new app.Ben buys 10,000 shares of AirLift stock.He reveals the company plans to Carly,who buys 5,000 shares.Carly tells Don,who tells Erwin,and each buys 1,000 shares.They know that Carly got her information from Ben.When AirLift publicly announces its new app,Ben,Carly,Don,and Erwin sell their stock for a profit. -Refer to Fact Pattern 28-2.If Ben is liable under the Securities Exchange Act of 1934,it will be because the information on which he based his purchase of AirLift stock was​

Cattle Ranch Company offers its stock for sale only in a single state.The law in the company's state is like the law in most states.Thus,the firm's offer is subject to state securities statutes that include​

Ridley is an officer of Sun Watts,Inc.Ridley knows that a Sun Watts engineer recently developed a new,inexpensive method for collecting,storing,and converting solar power into fuel.Ridley takes advantage of this information to buy Sun Watts stock from Taylor and,after the discovery is announced,to sell the stock to Ulrich at a profit.Taylor claims that this is a violation of federal law.Is Taylor correct? If so,what federal law has Ridley violated,and what are its possible penalties?​

To raise $120 million to expand operations,Primo Content Inc.makes a stock offering directly to sixty accredited investors and twenty sophisticated,but unaccredited investors.The firm plans to notify the SEC of sales.Under the Securities Act of 1933,this issue may qualify as an "exempt" transaction​

Corporate "outsiders" may be held liable for insider trading under Section 10(b)of the Securities Exchange Act of 1934 and SEC Rule 10b-5.

Spectrum Paints Inc.is a public company whose shares are traded in the public securities markets.Under the Sarbanes-Oxley Act of 202,the firm is subject to the direct corporate governance requirements of​

Fleet Delivery Corporation is a public company with a market capitalization of less than $75 million.Fleet is poised to issue securities in a transaction that,under the Securities Act of 1933,is "exempt." This enables Fleet to​

When a security is exempt from the registration requirements,its offering is also exempt from the provisions of the Securities Act of 1933.

Trend Clothing Corporation is a public company whose securities are traded among investors.Under the Securities Act of 1933,a security is​

Securities must be registered under the Securities Act of 1933 for the Securities Exchange Act of 1934 to apply.

The sale and transfer of securities are heavily regulated by federal and state statutes and by government agencies.

OnSpec,Inc. ,and its officers,directors,and shareholders,buy and sell securities.Section 16(b) of the Securities Exchange Act of 1934 covers purchases and sales of securities involving​

Orbital Flights,Inc. ,is required to register its securities under Section 12 of the Securities Exchange Act of 1934.Section 16(b) of the act covers​

The Securities Exchange Act of 1934 provides for continuous periodic disclosures by certain publicly held companies.