LEB 320F Final Exam with
All Correct Answers
Why do we need securities regulation? - Answer-To protect investors
To regulate
Protect persons investing
Sought to strengthen financial market
Securities Act of 1933 - Answer-1st federal securities law
Regulate insurance of securities by companies
Fraudulent behavior was outlawed
Registration required before new security
Goal: protect investing public
Seeks to regulate the issuer, underwriters & dealers so investors have adequate info.
Registration Process - Answer-Corporations sell securities to raise capital
Pre-filing Period - Answer-Issuers limited during pre-filing period
Issuer could not sell a security before registration was filed
Activity permuted was preliminary negotiations between issuer & underwriter
Waiting Period - Answer-Slow the distribution process so that the dealers and the public
have time to familiarize with info disclosed in the registration process
Ensure type of information that Congress thought investors needed would be widely
distributed (red herring prospectuses)
Post-Effective Period - Answer-Provide copy of final prospectus with every written offer,
supplemental sales literature, written confirmation of sales, or delivery of securities
Issuer - Answer-Manufacturer of goods
Underwriters - Answer-Wholesalers
Dealers - Answer-Retailers
Investors - Answer-Consumers
Disclosure Requirements - Answer-Financial statements
, Different kinds of stock sold with different kinds of rights attached to them
Different classes of stock that affects the price
Executives, who they are and how much money they make
Update discloser quarterly
Disclose information deemed significant
Common stock is what we trade
Who must register for disclosure? - Answer-All national companies who publicly trade
Over 2k trade holders
Over 500 people who own shares in your company
What is disclosed? - Answer-Anything a reasonable investor would disclose
Who's exempt from disclosure? - Answer-Brokers themselves
Bankers
Individual stock holders
Government identities
Corporate bond
Small groups
Local offerings
Civil Liabilities - Answer-SEC can come after you- take company 2 court
Department of justice will pursue criminal penalties
Violent crimes- max punishment is death
Low standard that citizens have to meet: All citizens have to prove they are
misunderstood
Who can you sue? - Answer-You can sue stockbroker, corporate executives,
accountants, anyone who had input in anything being made.
Shelf Registration - Answer-Registration statement that counts for awhile
Easier to issue large amounts of securities
SEC has final word
2/3-year registration period- statements were effective immediately(Automatically
admitted)
Companies have to update information
Typically very large companies
Securities Exchange Act of 1934 - Answer-Main focus: get ahold of securities that were
to hold an issue
Creative process meant to be offered
Pre-filing period
Company has to file registration statement
Corporation cannot advertise that they need an issue
Pre-filing period
Company preparing for initial public offering
All Correct Answers
Why do we need securities regulation? - Answer-To protect investors
To regulate
Protect persons investing
Sought to strengthen financial market
Securities Act of 1933 - Answer-1st federal securities law
Regulate insurance of securities by companies
Fraudulent behavior was outlawed
Registration required before new security
Goal: protect investing public
Seeks to regulate the issuer, underwriters & dealers so investors have adequate info.
Registration Process - Answer-Corporations sell securities to raise capital
Pre-filing Period - Answer-Issuers limited during pre-filing period
Issuer could not sell a security before registration was filed
Activity permuted was preliminary negotiations between issuer & underwriter
Waiting Period - Answer-Slow the distribution process so that the dealers and the public
have time to familiarize with info disclosed in the registration process
Ensure type of information that Congress thought investors needed would be widely
distributed (red herring prospectuses)
Post-Effective Period - Answer-Provide copy of final prospectus with every written offer,
supplemental sales literature, written confirmation of sales, or delivery of securities
Issuer - Answer-Manufacturer of goods
Underwriters - Answer-Wholesalers
Dealers - Answer-Retailers
Investors - Answer-Consumers
Disclosure Requirements - Answer-Financial statements
, Different kinds of stock sold with different kinds of rights attached to them
Different classes of stock that affects the price
Executives, who they are and how much money they make
Update discloser quarterly
Disclose information deemed significant
Common stock is what we trade
Who must register for disclosure? - Answer-All national companies who publicly trade
Over 2k trade holders
Over 500 people who own shares in your company
What is disclosed? - Answer-Anything a reasonable investor would disclose
Who's exempt from disclosure? - Answer-Brokers themselves
Bankers
Individual stock holders
Government identities
Corporate bond
Small groups
Local offerings
Civil Liabilities - Answer-SEC can come after you- take company 2 court
Department of justice will pursue criminal penalties
Violent crimes- max punishment is death
Low standard that citizens have to meet: All citizens have to prove they are
misunderstood
Who can you sue? - Answer-You can sue stockbroker, corporate executives,
accountants, anyone who had input in anything being made.
Shelf Registration - Answer-Registration statement that counts for awhile
Easier to issue large amounts of securities
SEC has final word
2/3-year registration period- statements were effective immediately(Automatically
admitted)
Companies have to update information
Typically very large companies
Securities Exchange Act of 1934 - Answer-Main focus: get ahold of securities that were
to hold an issue
Creative process meant to be offered
Pre-filing period
Company has to file registration statement
Corporation cannot advertise that they need an issue
Pre-filing period
Company preparing for initial public offering
