Business Its Legal, Ethical, and Global Environment: Chapter 19. All Answers - $8.99   Add to cart

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Business Its Legal, Ethical, and Global Environment: Chapter 19. All Answers

Business Its Legal, Ethical, and Global Environment: Chapter 19 1. The states did not have federal legislation prior to the time of the federal securities laws. a. b. : 1 Easy : United States - BUSPROG: Analytic : United States - OH - AICPA: BB-Legal : History of Securities Law : Bloom's: Knowledge 2. A primary offering is a first-time offering of shares for sale. a. b. : 1 Easy : United States - BUSPROG: Analytic : United States - OH - AICPA: BB-Legal : Primary Offering Regulation: The 1933 Securities Act : Bloom's: Knowledge 3. A bond is not considered a security under federal law. a. b. : 1 Easy : United States - BUSPROG: Analytic : United States - OH - AICPA: BB-Legal : What is a Security? : Bloom's: Knowledge 4. A limited partnership interest is not considered a security. a. b. : 1 Easy : United States - BUSPROG: Analytic : United States - OH - AICPA: BB-Legal : What is a Security? : Bloom's: Knowledge 5. The 1933 Securities Act regulates primary offerings. a. b. : 1 Easy : United States - BUSPROG: Analytic : United States - OH - AICPA: BB-Legal : Primary Offering Regulation: The 1933 Securities Act : Bloom's: Knowledge 6. The 1934 Securities Exchange Act regulates the secondary sale of securities. a. b. : 1 Easy : United States - BUSPROG: Analytic : United States - OH - AICPA: BB-Legal : The Securities Exchange Act of 1934 : Bloom's: Knowledge 7. Municipal bonds are exempt from SEC requirements. a. b. : 1 Easy : United States - BUSPROG: Analytic : United States - OH - AICPA: BB-Legal : Primary Offering Regulation: The 1933 Securities Act : Bloom's: Knowledge 8. The intrastate registration exemption requires that 100 percent of the offerees be residents of the same state as the issuer. a. b. : 1 Easy : United States - BUSPROG: Analytic : United States - OH - AICPA: BB-Legal : Regulating Primary Offerings: Exemptions : Bloom's: Knowledge 9. The intrastate registration exemption requires that 100 percent of the issuer's assets be located in its resident state. a. b. : 1 Easy : United States - BUSPROG: Analytic : United States - OH - AICPA: BB-Legal : Regulating Primary Offerings: Exemptions : Bloom's: Knowledge 10. Regulation A short-form exemptions can be used for offerings of $5 million or less. a. b. : 1 Easy : United States - BUSPROG: Analytic : United States - OH - AICPA: BB-Legal : Regulating Primary Offerings: Exemptions : Bloom's: Knowledge 11. An accredited investor includes any corporation. a. b. : 1 Moderate : United States - BUSPROG: Analytic : United States - OH - AICPA: BB-Legal : Regulating Primary Offerings: Exemptions : Bloom's: Comprehension 12. A natural person whose net worth is greater than $1 million is an accredited investor. a. b. : 1 Moderate : United States - BUSPROG: Analytic : United States - OH - AICPA: BB-Legal : Regulating Primary Offerings: Exemptions : Bloom's: Comprehension 13. All Regulation D offerings can be sold through advertising. a. b. : 1 Moderate : United States - BUSPROG: Analytic : United States - OH - AICPA: BB-Legal : Regulating Primary Offerings: Exemptions : Bloom's: Comprehension 14. The SEC prohibits an analyst from issuing a report that is contrary to the analyst’s opinion about a security. a. b. : 1 Moderate : United States - BUSPROG: Analytic : United States - OH - AICPA: BB-Legal : The Securities Exchange Act of 1934 : Bloom's: Knowledge 15. Rule 505 carries a 35-purchaser maximum (excluding accredited investors). a. b. : 1 Moderate : United States - BUSPROG: Analytic : United States - OH - AICPA: BB-Legal : Regulating Primary Offerings: Exemptions : Bloom's: Knowledge 16. A bank is an example of an accredited investor for purposes of Regulation D. a. b. : 1 Moderate : United States - BUSPROG: Analytic : United States - OH - AICPA: BB-Legal : Regulating Primary Offerings: Exemptions : Bloom's: Knowledge 17. Rule 506 has no dollar limitations. a. b. : 1 Moderate : United States - BUSPROG: Analytic : United States - OH - AICPA: BB-Legal : Regulating Primary Offerings: Exemptions : Bloom's: Knowledge 18. Rule 504 has no limitations on number of offerees. a. b. : 1 Moderate : United States - BUSPROG: Analytic : United States - OH - AICPA: BB-Legal : Regulating Primary Offerings: Exemptions : Bloom's: Knowledge 19. Rule 506 carries a 35-purchaser maximum (excluding accredited investors). a. b. : 1 Moderate : United States - BUSPROG: Analytic : United States - OH - AICPA: BB-Legal : Regulating Primary Offerings: Exemptions : Bloom's: Knowledge 20. Shareholder proposals that call for a shareholder vote on compensation are proper under SEC rules. a. b. : 1 Moderate : United States - BUSPROG: Analytic : United States - OH - AICPA: BB-Legal : Regulating Voter Information - Section 14 : Bloom's: Application 21. There are no resale limitations on Regulation A offerings. a. b. : 1 Moderate : United States - BUSPROG: Analytic : United States - OH - AICPA: BB-Legal : Regulating Primary Offerings: Exemptions : Bloom's: Knowledge 22. A tombstone ad can be run before the registration statement is effective. a. b. : 1 Moderate : United States - BUSPROG: Analytic : United States - OH - AICPA: BB-Legal : What Must Be Filed: Documents and Information for Registration : Bloom's: Knowledge 23. The SEC conducts a merit review of its filed registrations. a. b. : 1 Moderate : United States - BUSPROG: Analytic : United States - OH - AICPA: BB-Legal : What Must Be Filed: Documents and Information for Registration : Bloom's: Knowledge 24. A red herring is a prospectus sent prior to the effective date of the registration date. a. b. : 1 Moderate : United States - BUSPROG: Analytic : United States - OH - AICPA: BB-Legal : What Must Be Filed: Documents and Information for Registration : Bloom's: Knowledge 25. Section 11 of the 1933 Securities Act imposes liability for the failure to file a registration statement. a. b. : 1 Moderate : United States - BUSPROG: Analytic : United States - OH - AICPA: BB-Legal : Violations of the 1933 Act : Bloom's: Knowledge 26. Only directors can be held liable for a Section 11 violation. a. b. : 1 Moderate : United States - BUSPROG: Analytic : United States - OH - AICPA: BB-Legal : Violations of the 1933 Act : Bloom's: Knowledge 27. Only those who actually signed the registration statement can be liable for a Section 11 violation. a. b. : 1 Moderate : United States - BUSPROG: Analytic : United States - OH - AICPA: BB-Legal : Violations of the 1933 Act : Bloom's: Knowledge 28. The due diligence defense is one that is easy to establish. a. b. : 1 Moderate : United States - BUSPROG: Analytic : United States - OH - AICPA: BB-Legal : Violations of the 1933 Act : Bloom's: Knowledge 29. A Section 12 violation results from making a material misstatement in a registration statement. a. b. : 1 Moderate : United States - BUSPROG: Analytic : United States - OH - AICPA: BB-Legal : Violations of the 1933 Act : Bloom's: Knowledge 30. Selling securities before the effective date of the registration statement is a Section 12 violation. a. b. : 1 Moderate : United States - BUSPROG: Analytic : United States - OH - AICPA: BB-Legal : Violations of the 1933 Act : Bloom's: Knowledge 31. A company registered on the New York Stock Exchange must file a 10-Q report. a. b. : 1 Moderate : United States - BUSPROG: Analytic : United States - OH - AICPA: BB-Legal : Periodic Filing Under the 1934 Act: Those Alphabet Reports : Bloom's: Application 32. Section 10(b) applies to all securities sold in interstate commerce. a. b. : 1 Moderate : United States - BUSPROG: Analytic : United States - OH - AICPA: BB-Legal : The 1934 Act Antifraud Provision: 10(b) : Bloom's: Knowledge 33. Section 10(b) applies to corporate insiders and tippees. a. b. : 1 Moderate : United States - BUSPROG: Analytic : United States - OH - AICPA: BB-Legal : The 1934 Act Antifraud Provision: 10(b) : Bloom's: Application 34. Only an actual seller or purchaser can bring a suit for civil recovery under 10(b). a. b. : 1 Moderate : United States - BUSPROG: Analytic : United States - OH - AICPA: BB-Legal : The 1934 Act Antifraud Provision: 10(b) : Bloom's: Knowledge 35. Section 16 applies to all stock transactions of directors and officers (of a 1934 Act company). a. b. : 1 Moderate : United States - BUSPROG: Analytic : United States - OH - AICPA: BB-Legal : Insider Trading and Short Swing Profits : Bloom's: Comprehension 36. Registration statements must include audited financial statements. a. b. : 1 Moderate : United States - BUSPROG: Analytic : United States - OH - AICPA: BB-Legal : What Must Be Filed: Documents and Information for Registration : Bloom's: Comprehension 37. The federal securities laws do not apply to proxy solicitation. a. b. : 1 Moderate : United States - BUSPROG: Analytic : United States - OH - AICPA: BB-Legal : Regulating Voter Information - Section 14 : Bloom's: Comprehension 38. Blue sky laws are state securities registration laws. a. b. : 1 Easy : United States - BUSPROG: Analytic : United States - OH - AICPA: BB-Legal : State Securites Laws : Bloom's: Knowledge 39. A merit review standard is the same as the SEC review. a. b. : 1 Easy : United States - BUSPROG: Analytic : United States - OH - AICPA: BB-Legal : State Securities Laws : Bloom's: Knowledge 40. Section 10(b) violations carry fines of only $10,000. a. b. : 1 Easy : United States - BUSPROG: Analytic : United States - OH - AICPA: BB-Legal : The 1934 Act Antifraud Provision: 10(b) : Bloom's: Knowledge 41. Section 12 violations would include selling before the effective date. a. b. : 1 Moderate : United States - BUSPROG: Analytic : United States - OH - AICPA: BB-Legal : Violations of the 1933 Act : Bloom's: Comprehension 42. A prospectus is covered under Section 11. a. b. : 1 Moderate : United States - BUSPROG: Analytic : United States - OH - AICPA: BB-Legal : Violations of the 1933 Act : Bloom's: Comprehension 43. All companies required to register under the 1934 Act must file a 10-K report. a. b. : 1 Moderate : United States - BUSPROG: Analytic : United States - OH - AICPA: BB-Legal : Periodic Filing Under the 1934 Act: Those Alphabet Reports : Bloom's: Comprehension 44. Regulation A filings are exempt from Section 11 liability. a. b. : 1 Moderate : United States - BUSPROG: Analytic : United States - OH - AICPA: BB-Legal : Regulating Primary Offerings: Exemptions : Bloom's: Knowledge 45. A registration approved by the SEC need not be registered at the state level. a. b. : 1 Moderate : United States - BUSPROG: Analytic : United States - OH - AICPA: BB-Legal : State Securities Laws : Bloom's: Knowledge 46. Bernie Madoff was sentenced to 50 years in prison for his fraud convictions. a. b. : 1 Easy : United States - BUSPROG: Analytic : United States - OH - AICPA: BB-Legal : The Securities Exchange Act of 1934 : Bloom's: Knowledge 47. Shares of stock issued pursuant to a corporate reorganization must be registered. a. b. : 1 Moderate : United States - BUSPROG: Analytic : United States - OH - AICPA: BB-Legal : Regulating Primary Offerings: Exemptions : Bloom's: Knowledge 48. Under Section 14, shareholders can make proposals for action in the proxy materials. a. b. : 1 Moderate : United States - BUSPROG: Analytic : United States - OH - AICPA: BB-Legal : Regulating Voter Information - Section 14 : Bloom's: Knowledge 49. The intrastate exemption violates the commerce clause. a. b. : 1 Moderate : United States - BUSPROG: Analytic : United States - OH - AICPA: BB-Legal : Regulating Primary Offerings: Exemptions : Bloom's: Knowledge 50. Insider trading rules apply only to officers and directors. a. b. : 1 Moderate : United States - BUSPROG: Analytic : United States - OH - AICPA: BB-Legal : Insider Trading and Short Swing Profits : Bloom's: Application 51. Short-swing profits are acceptable if there was no inside information. a. b. : 1 Moderate : United States - BUSPROG: Analytic : United States - OH - AICPA: BB-Legal : Insider Trading and Short Swing Profits : Bloom's: Knowledge 52. Shares issued through reorganizations must be registered. a. b. : 1 Moderate : United States - BUSPROG: Analytic : United States - OH - AICPA: BB-Legal : Regulating Primary Offerings: Exemptions : Bloom's: Knowledge 53. A merger is the combination of two firms into one of the old firms. a. b. : 1 Moderate : United States - BUSPROG: Analytic : United States - OH - AICPA: BB-Legal : Shareholder Rights in Takeovers, Mergers, and Consolidations : Bloom's: Knowledge 54. In a consolidation, a new firm is established. a. b. : 1 Moderate : United States - BUSPROG: Analytic : United States - OH - AICPA: BB-Legal : Shareholder Rights in Takeovers, Mergers, and Consolidations : Bloom's: Knowledge 55. A tender offer is another form of business combination. a. b. : 1 Moderate : United States - BUSPROG: Analytic : United States - OH - AICPA: BB-Legal : Shareholder Rights in Takeovers, Mergers, and Consolidations : Bloom's: Knowledge 56. A hostile takeover is one supported by management. a. b. : 1 Moderate : United States - BUSPROG: Analytic : United States - OH - AICPA: BB-Legal : Shareholder Rights in Takeovers, Mergers, and Consolidations : Bloom's: Knowledge 57. Asset acquisitions are not subject to any federal regulation. a. b. : 1 Moderate : United States - BUSPROG: Analytic : United States - OH - AICPA: BB-Legal : Shareholder Rights in Takeovers, Mergers, and Consolidations : Bloom's: Knowledge 58. The Williams Act only applies to National Stock Exchange companies. a. b. : 1 Moderate : United States - BUSPROG: Analytic : United States - OH - AICPA: BB-Legal : Shareholder Rights in Takeovers, Mergers, and Consolidations : Bloom's: Knowledge 59. A company filing Williams Act materials is not required to file proxy materials. a. b. : 1 Moderate : United States - BUSPROG: Analytic : United States - OH - AICPA: BB-Legal : Shareholder Rights in Takeovers, Mergers, and Consolidations : Bloom's: Knowledge 60. State antitakeover statutes that delay takeovers are unconstitutional. a. b. : 1 Moderate : United States - BUSPROG: Analytic : United States - OH - AICPA: BB-Legal : Shareholder Rights in Takeovers, Mergers, and Consolidations : Bloom's: Knowledge 61. Only a small minority of states have antitakeover statutes. a. b. : 1 Moderate : United States - BUSPROG: Analytic : United States - OH - AICPA: BB-Legal : Shareholder Rights in Takeovers, Mergers, and Consolidations : Bloom's: Knowledge 62. To qualify for an intrastate offering exemption, the shares must contain transfer restrictions. a. b. : 1 Moderate : United States - BUSPROG: Analytic : United States - OH - AICPA: BB-Legal : Regulating Primary Offerings: Exemptions : Bloom's: Knowledge 63. An IPO does not require SEC registration. a. b. : 1 Moderate : United States - BUSPROG: Analytic : United States - OH - AICPA: BB-Legal : Regulating Primary Offerings: Registration : Bloom's: Knowledge 64. Shelf registration is good for a maximum of two years, provided there are regular filings such as the 10-K. a. b. : 1 Moderate : United States - BUSPROG: Analytic : United States - OH - AICPA: BB-Legal : What Must Be Filed: Documents and Information for Registration : Bloom's: Knowledge 65. The due diligence defense to Section 11 is difficult to prove. a. b. : 1 Moderate : United States - BUSPROG: Analytic : United States - OH - AICPA: BB-Legal : Violations of the 1933 Act : Bloom's: Knowledge 66. Shareholder proposals can include such as executive compensation. a. b. : 1 Moderate : United States - BUSPROG: Analytic : United States - OH - AICPA: BB-Legal : Regulating Voter Information - Section 14 : Bloom's: Application 67. Publicly traded companies can no longer issue non-GAAP financial statements. a. b. : 1 Moderate : United States - BUSPROG: Analytic : United States - OH - AICPA: BB-Legal : Violations of the 1933 Act : Bloom's: Application 68. The penalties for certification of financial statements are up to $1 million in fines and/or 10 years. a. b. : 1 Moderate : United States - BUSPROG: Analytic : United States - OH - AICPA: BB-Legal : Periodic Filing Under the 1934 Act: Those Alphabet Reports : Bloom's: Knowledge 69. Accounting firms must register annually with PCAOB if they want to audit publicly traded companies. a. b. : 1 Moderate : United States - BUSPROG: Analytic : United States - OH - AICPA: BB-Legal : Violations of the 1933 Act : Bloom's: Knowledge 70. Black-out periods are timeframes in which trading by company employees is prohibited. a. b. : 1 Moderate : United States - BUSPROG: Analytic : United States - OH - AICPA: BB-Legal : Violations of the 1933 Act : Bloom's: Knowledge 71. Short-swing profit rules apply only to officers and directors. a. b. : 1 Moderate : United States - BUSPROG: Analytic : United States - OH - AICPA: BB-Legal : Insider Trading and Short Swing Profits : Bloom's: Knowledge 72. Shareholders who solicit proxies need not comply with Section 14 of the 1934 Act. a. b. : 1 Moderate : United States - BUSPROG: Analytic : United States - OH - AICPA: BB-Legal : Regulating Voter Information - Section 14 : Bloom's: Knowledge 73. If the earnings of a company are revealed to be , the officers who earned bonuses based on these earnings must forfeit them. a. b. : 1 Moderate : United States - BUSPROG: Analytic : United States - OH - AICPA: BB-Legal : Violations of the 1933 Act : Bloom's: Knowledge 74. The trend in international markets is away from regulating insider trading. a. b. : 1 Moderate : United States - BUSPROG: Analytic : United States - OH - AICPA: BB-Legal : International Issues in Securities Laws : Bloom's: Knowledge 75. Insider trading rules apply to information exchanged over the Internet and chat rooms. a. b. : 1 Moderate : United States - BUSPROG: Analytic : United States - OH - AICPA: BB-Legal : Insider Trading and Short Swing Profits : Bloom's: Knowledge 76. Pump and dump is the act of hyping a stock in order to benefit from a sale once the hype affects the price. a. b. : 1 Moderate : United States - BUSPROG: Analytic : United States - OH - AICPA: BB-Legal : The 1934 Act Antifraud Provision: 10(b) : Bloom's: Knowledge 77. Sarbanes-Oxley requires all covered companies to have a code of ethics for financial officers. a. b. : 1 Moderate : United States - BUSPROG: Analytic : United States - OH - AICPA: BB-Legal : Violations of the 1933 Act : Bloom's: Knowledge 78. Under Sarbanes-Oxley, a company must file an 8-K if it has waived its code of ethics for a financial reporting officer. a. b. : 1 Moderate : United States - BUSPROG: Analytic : United States - OH - AICPA: BB-Legal : Violations of the 1933 Act : Bloom's: Knowledge 79. Under Sarbanes-Oxley, audit committees of publicly held companies’ boards need not be made up of independent members so long as the majority of the board is independent. a. b. : 1 Moderate : United States - BUSPROG: Analytic : United States - OH - AICPA: BB-Legal : Violations of the 1933 Act : Bloom's: Knowledge 80. Destruction of documents related to the financial reports of a company carries a 20-year penalty. a. b. : 1 Moderate : United States - BUSPROG: Analytic : United States - OH - AICPA: BB-Legal : Periodic Filing Under the 1934 Act: Those Alphabet Reports : Bloom's: Knowledge 81. Attorneys who represent publicly traded companies need not report any financial fraud to boards because of attorney-client privilege. a. b. : 1 Moderate : United States - BUSPROG: Analytic : United States - OH - AICPA: BB-Legal : The 1934 Act Antifraud Provision: 10(b) : Bloom's: Knowledge 82. An auditor for a company cannot also perform appraisal functions. a. b. : 1 Moderate : United States - BUSPROG: Analytic : United States - OH - AICPA: BB-Legal : Violations of the 1933 Act : Bloom's: Knowledge 83. Section 404 of Sarbanes-Oxley is the section that requires certification of the adequacy of a company’s internal controls. a. b. : 1 Moderate : United States - BUSPROG: Analytic : United States - OH - AICPA: BB-Legal : Violations of the 1933 Act : Bloom's: Knowledge 84. Under Sarbanes-Oxley, audit partners in charge of accounts must be rotated every 10 years. a. b. : 1 Moderate : United States - BUSPROG: Analytic : United States - OH - AICPA: BB-Legal : Violations of the 1933 Act : Bloom's: Knowledge 85. EBITDA is the same as GAAP accounting. a. b. : 1 Moderate : United States - BUSPROG: Analytic : United States - OH - AICPA: BB-Legal : Violations of the 1933 Act : Bloom's: Knowledge 86. Under Sarbanes-Oxley, every board audit committee must have at least one financial expert. a. b. : 1 Moderate : United States - BUSPROG: Analytic : United States - OH - AICPA: BB-Legal : Violations of the 1933 Act : Bloom's: Knowledge 87. Sarbanes-Oxley has special anti-retaliation protections for employees who raise questions about financial reports and internal accounting. a. b. : 1 Moderate : United States - BUSPROG: Analytic : United States - OH - AICPA: BB-Legal : Violations of the 1933 Act : Bloom's: Knowledge 88. A primary offering is an: a. initial offering of securities. b. offering by a 1933 or 1934 Act company. c. offer of treasury shares to original shareholders. d. none of the above : a 1 Moderate : United States - BUSPROG: Analytic : United States - OH - AICPA: BB-Legal : Primary Offering Regulation: The 1933 Securities Act : Bloom's: Knowledge 89. Which of the following would not be considered a security under the 1933 Act? a. limited partnership interest b. bonds c. pension fund d. Subchapter S corporate stock : c 1 Moderate : United States - BUSPROG: Analytic : United States - OH - AICPA: BB-Legal : What is a Security? : Bloom's: Application 90. Which of the following is not an exempt security under the 1933 Act? a. municipal bonds b. insurance policies c. promissory notes d. annuities e. All of the above are exempt securities. : c 1 Moderate : United States - BUSPROG: Analytic : United States - OH - AICPA: BB-Legal : Regulating Primary Offerings: Exemptions : Bloom's: Application 91. Which of the following is not required for the intrastate exemption? a. The investors and issuer must all be residents of the same state. b. Of the issuer's income, 100 percent must be earned in its resident state. c. Of the issuer's assets, 80 percent must be located in its resident state. d. Of the proceeds from the sale, 80 percent must be earned on operations in the state. e. All of the above are requirements. : b 1 Moderate : United States - BUSPROG: Analytic : United States - OH - AICPA: BB-Legal : Regulating Primary Offerings: Exemptions : Bloom's: Application 92. Regulation A offerings: a. still require registration. b. are available for offerings up to $10 million. c. are now part of Regulation D. d. none of the above : a 1 Moderate : United States - BUSPROG: Analytic : United States - OH - AICPA: BB-Legal : Regulating Primary Offerings: Exemptions : Bloom's: Application 93. Which of the following is not an accredited investor for purposes of Regulation D? a. any bank b. anyone who certifies that he can afford to lose the investment c. a purchaser of $150,000 or more of the securities d. any person with income greater than $150,000 : d 1 Moderate : United States - BUSPROG: Analytic : United States - OH - AICPA: BB-Legal : Regulating Primary Offerings: Exemptions : Bloom's: Application 94. A comment or deficiency letter: a. is a denial of registration. b. must be issued within 20 days of the filing of the registration statement. c. can only be issued once. d. all of the above : b 1 Knowledge : United States - BUSPROG: Analytic : United States - OH - AICPA: BB-Legal : What Must Be Filed: Documents and Information for Registration : Bloom's: Knowledge 95. Which of the following can be done before the registration statement is effective? a. tombstone ads b. red herrings c. offers to sell to accredited investors d. a and b e. all of the above : d 1 Moderate : United States - BUSPROG: Analytic : United States - OH - AICPA: BB-Legal : What Must Be Filed: Documents and Information for Registration : Bloom's: Application 96. Which of the following is not a Section 12 violation? a. statements in the registration statement b. failure to file a registration statement c. statement in the prospectus d. All of the above are Section 12 violations. : a 1 Moderate : United States - BUSPROG: Analytic : United States - OH - AICPA: BB-Legal : Violations of the 1933 Act : Bloom's: Knowledge 97. Who is liable for a Section 11 violation? a. directors b. officers c. only directors who sign the registration statement d. both a and b e. none of the above : d 1 Moderate : United States - BUSPROG: Analytic : United States - OH - AICPA: BB-Legal : Violations of the 1933 Act : Bloom's: Comprehension 98. Which firms would be required to file a 10-K? a. company with 600 shareholders and $5 million in assets and not listed on national exchange b. company with 300 shareholders and $10 million in assets and not listed on a national exchange c. company with 700 shareholders and $6 million in assets and listed on a national exchange d. all of the above : c 1 Moderate : United States - BUSPROG: Analytic : United States - OH - AICPA: BB-Legal : Periodic Filing Under the 1934 Act: Those Alphabet Reports : Bloom's: Application 99. Section 10(b) applies only to: a. stock exchange listed stores. b. public corporations. c. officers, directors, and 10 percent shareholders. d. none of the above : d 1 Moderate : United States - BUSPROG: Analytic : United States - OH - AICPA: BB-Legal : The 1934 Act Antifraud Provision: 10(b) : Bloom's: Comprehension 100. Tippees: a. are people who get information from corporate insiders. b. are relatives of corporate directors who are given nonpublic information. c. can be liable under section 10(b). d. all of the above : d 1 Moderate : United States - BUSPROG: Analytic : United States - OH - AICPA: BB-Legal : The 1934 Act Antifraud Provision: 10(b) : Bloom's: Application 101. Who would have standing to bring a civil suit under section 10(b)? a. purchaser of shares b. contractor with firm who loses business c. person who refrained from buying because of overly pessimistic information d. person who refrained from selling because of overly optimistic information e. all of the above : a 1 Moderate : United States - BUSPROG: Analytic : United States - OH - AICPA: BB-Legal : Violations of the 1933 Act : Bloom's: Comprehension 102. The scienter required for proof of a 10(b) violation is: a. intent to defraud. b. gross negligence. c. negligence. d. a or b : a 1 Moderate : United States - BUSPROG: Analytic : United States - OH - AICPA: BB-Legal : The 1934 Act Antifraud Provision: 10(b) : Bloom's: Comprehension 103. Section 16 applies to: a. all shareholders. b. only directors who also own stock. c. an officer of a corporation. d. only officers who own stock. e. none of the above : c 1 Moderate : United States - BUSPROG: Analytic : United States - OH - AICPA: BB-Legal : Insider Trading and Short Swing Profits : Bloom's: Comprehension 104. The 1934 Act proxy registration requirements: a. apply only to management. b. include a requirement for shareholders' proposals. c. are not applicable to dissenters' solicitations. d. none of the above : b 1 Moderate : United States - BUSPROG: Analytic : United States - OH - AICPA: BB-Legal : Regulating Voter Information - Section 14 : Bloom's: Comprehension 105. The 1934 Act proxy regulations apply: a. only to corporations. b. only to annual meeting solicitations. c. to all corporations. d. none of the above : d 1 Moderate : United States - BUSPROG: Analytic : United States - OH - AICPA: BB-Legal : Regulating Voter Information - Section 14 : Bloom's: Comprehension 106. Under Section 14, a shareholder proposal in the proxy materials: a. is limited to 200 words. b. must be made by a shareholder who owns at least 5 percent of the outstanding shares of the corporation. c. need not be included if management objects. d. all of the above : a 1 Moderate : United States - BUSPROG: Analytic : United States - OH - AICPA: BB-Legal : Regulating Voter Information - Section 14 : Bloom's: Comprehension 107. Which of the following is of a Rule 504 offering? a. It must be made only to accredited investors. b. It is limited to $1 million. c. It is limited to 35 purchasers. d. all of the above : b 1 Challenging : United States - BUSPROG: Analytic : United States - OH - AICPA: BB-Legal : Regulating Primary Offerings: Exemptions : Bloom's: Knowledge 108. A tombstone ad: a. is permitted in Regulation D offerings. b. is an offer to sell securities. c. can be run prior to the effective date of the registration. d. all of the above : c 1 Moderate : United States - BUSPROG: Analytic : United States - OH - AICPA: BB-Legal : What Must Be Filed: Documents and Information for Registration : Bloom's: Knowledge 109. Section 10(b) would apply to which of the following situations? a. a financial printer trading stock based on takeover information in the printing he is doing for a corporation b. an accounting firm performing an audit in a grossly negligent fashion that results in misleading financial statements c. a guest at a reception trading on information she overheard at the party d. none of the above : d 1 Moderate : United States - BUSPROG: Analytic : United States - OH - AICPA: BB-Legal : The 1934 Act Antifraud Provision: 10(b) : Bloom's: Application 110. Section 16 applies: a. only to shareholders. b. to directors of all covered corporations. c. when there is a purchase followed by a sale within a six-month period. d. all of the above : b 1 Moderate : United States - BUSPROG: Analytic : United States - OH - AICPA: BB-Legal : Insider Trading and Short Swing Profits : Bloom's: Comprehension 111. Maxine Knight is an investment banker who has just completed negotiations for a merger between two major motion picture studios. Maxine lives with Ron Heywood and suggests dinner to celebrate the successful negotiations that will become public in three days. Ron celebrates with Maxine and the next morning buys substantial blocks of shares in both the firms. After the merger is announced, the value of the shares doubles. Which of the following statements is ? a. Ron has violated Section 10(b). b. Ron is not an insider and therefore has not violated 10(b). c. Ron has probably violated Section 16. d. none of the above : a 1 Challenging : United States - BUSPROG: Reflective Thinking: Re - BUSPROG: Reflective Thinking : United States - OH - AICPA: BB-Critical Thinking : Insider Trading and Short Swing Profits : Bloom's: Application 112. Venture Capital, Inc. needs to raise $10 million in capital and has been able to obtain the agreements of ten insurance companies to invest $1 million each. If Venture wishes to avoid the cost of full SEC registration, it should: a. simply register under the state blue sky laws. b. use a Rule 504 exemption. c. use Regulation A. d. none of the above : d 1 Challenging : United States - BUSPROG: Reflective Thinking: Re - BUSPROG: Reflective Thinking : United States - OH - AICPA: BB-Critical Thinking : Regulating Primary Offerings: Exemptions : Bloom's: Application 113. Which of the following is not a security for purposes of the 1933 Act? a. a limited partnership interest b. a promissory note due in six months c. a demand note d. All of the above are securities. : b 1 Challenging : United States - BUSPROG: Reflective Thinking: Re - BUSPROG: Reflective Thinking : United States - OH - AICPA: BB-Critical Thinking : What is a Security? : Bloom's: Application 114. Which of the following does not have resale restrictions? a. intrastate sales b. Rule 505 c. Regulation A d. none of the above : c 1 Moderate : United States - BUSPROG: Analytic : United States - OH - AICPA: BB-Legal : Regulating Primary Offerings: Exemptions : Bloom's: Knowledge 115. In Stoneridge, Charter Communications engaged in which of the following activities? a. Misclassification of its customer base b. Improper capitalization c. Delayed reporting of material facts d. All of these : d 1 Moderate : United States - BUSPROG: Analytic : United States - OH - AICPA: BB-Legal : The 1934 Act Antifraud Provision: 10(b) : Bloom's: Comprehension 116. Who would be a tippee for purposes of insider trading? a. a janitor who gathers information by reading files on corporate counsel's desk b. an MBA student who tracks the market very closely c. a broker who once worked in the pharmaceutical industry d. All of the above would be tippees. : a 1 Moderate : United States - BUSPROG: Reflective Thinking: Re - BUSPROG: Reflective Thinking : United States - OH - AICPA: BB-Critical Thinking : The 1934 Act Antifraud Provision: 10(b) : Bloom's: Application 117. Which of the following exemptions under the 1933 Securities Act does not have limitations on the number of purchasers? a. Rule 504 b. Rule 505 c. Rule 506 d. All of the above have limitations on the number of purchasers. : a 1 Moderate : United States - BUSPROG: Analytic : United States - OH - AICPA: BB-Legal : Regulating Primary Offerings: Exemptions : Bloom's: Knowledge 118. Which of the following is not a defense to information in the registration statement? a. due diligence b. limited time as a director c. purchaser knew the information was at the time of purchase d. None of the above is a defense. : b 1 Moderate : United States - BUSPROG: Analytic : United States - OH - AICPA: BB-Legal : Violations of the 1933 Act : Bloom's: Knowledge 119. What does the Securities Litigation Reform Act's safe harbor provision do? a. eliminates director and officer liability under Section 11 b. eliminates auditors' liability under Section 11 c. provides liability protection for income predictions in the registration statement d. all of the above : c 1 Moderate : United States - BUSPROG: Analytic : United States - OH - AICPA: BB-Legal : Violations of the 1933 Act : Bloom's: Knowledge 120. Corporation A merges with Corporation B and becomes Corporation B. The transaction is a: a. merger. b. consolidation. c. tender offer. d. none of the above : a 1 Moderate : United States - BUSPROG: Analytic : United States - OH - AICPA: BB-Legal : Shareholder Rights in Takeovers, Mergers, and Consolidations : Bloom's: Knowledge 121. Bob's Grocery merges with Pete's Produce and becomes PB Foods. The transaction is a: a. merger. b. consolidation. c. tender offer. d. none of the above : b 1 Moderate : United States - BUSPROG: Analytic : United States - OH - AICPA: BB-Legal : Shareholder Rights in Takeovers, Mergers, and Consolidations : Bloom's: Knowledge 122. Williams Act filings are: a. only required of offerors. b. not required of white knights. c. not required in management offers. d. none of the above : a 1 Moderate : United States - BUSPROG: Analytic : United States - OH - AICPA: BB-Legal : Shareholder Rights in Takeovers, Mergers, and Consolidations : Bloom's: Knowledge 123. State laws regulating tender offers are: a. preempted by the Williams Act. b. unconstitutional under the Commerce Clause. c. no longer in existence. d. none of the above : d 1 Moderate : United States - BUSPROG: Analytic : United States - OH - AICPA: BB-Legal : Shareholder Rights in Takeovers, Mergers, and Consolidations : Bloom's: Knowledge 124. State antitakeover statutes: a. generally require additional filings beyond Williams Act requirements. b. generally deal with corporate governance. c. are valid only against corporations formed after passage of the law. d. none of the above : b 1 Moderate : United States - BUSPROG: Analytic : United States - OH - AICPA: BB-Legal : Shareholder Rights in Takeovers, Mergers, and Consolidations : Bloom's: Knowledge 125. Pacific West Utility has made a takeover offer to the shareholders of San Diego Edison. The board and management are concerned about the ability of Pacific West to manage San Diego Edison and have solicited the help of Western Power. Western Power will make a tender offer to the shareholders of San Diego Edison that is $1.00 more than Pacific West's offer. Which of the following statements is ? a. Pacific West is the target company. b. Western Power is the target company. c. Western Power must comply with the Williams Act. d. Pacific West need not comply with the Williams Act. : c 1 Challenging : United States - BUSPROG: Reflective Thinking: Re - BUSPROG: Reflective Thinking : United States - OH - AICPA: BB-Critical Thinking : Shareholder Rights in Takeovers, Mergers, and Consolidations : Bloom's: Application 126. A hostile tender offer is made: a. to the board of the target company. b. to the shareholders of the target company. c. through SEC communications to shareholders. d. none of the above : b 1 Moderate : United States - BUSPROG: Analytic : United States - OH - AICPA: BB-Legal : Shareholder Rights in Takeovers, Mergers, and Consolidations : Bloom's: Knowledge 127. The shareholders of Tennis Man, Inc. have just approved an amendment to their articles of incorporation that requires 75 percent of all shareholders to approve a merger before it can take place. The amendment is an example of: a. a tender offer. b. an illegal act preempted by the Williams Act. c. a valid antitakeover defense. d. none of the above : c 1 Challenging : United States - BUSPROG: Reflective Thinking: Re - BUSPROG: Reflective Thinking : United States - OH - AICPA: BB-Critical Thinking : Shareholder Rights in Takeovers, Mergers, and Consolidations : Bloom's: Application 128. Which of the following actions can the SEC take if there is a violation of Section 14 on proxy solicitation? a. an injunction preventing the vote with the proxies b. "unwinding" the election results c. order reimbursement of costs for second solicitation by the party who violated Section 14 d. The SEC can take any of the above actions. : d 1 Moderate : United States - BUSPROG: Analytic : United States - OH - AICPA: BB-Legal : Regulating Voter Information - Section 14 : Bloom's: Knowledge 129. Hawkin and Snead is a partnership located in South Dakota that specializes in documentary films. Hawkin and Snead feel that they need additional capital to expand and their personal assets are fully tapped. The partners envision a sale of common stock shares only to South Dakota residents and they need about $10,000,000. They also realize that their pool of investors is large, but shallow. That is, they can recruit many potential share purchasers, but their investment amounts will be small. They feel they do not have the money for a national offering and full-blown SEC registration. Which of the following exemptions will suit Hawkin and Snead's needs best? a. a Rule 504 offering b. a Rule 505 offering c. a Regulation A offering d. an intrastate offering e. none of the above : d 1 Challenging : United States - BUSPROG: Reflective Thinking: Re - BUSPROG: Reflective Thinking : United States - OH - AICPA: BB-Critical Thinking : Regulating Primary Offerings: Exemptions : Bloom's: Application 130. To which of the following will the 10b prohibitions on insider trading apply? a. An officer exercising stock options on the day before the company announces its earnings for the quarter. b. An officer exercising stock options on the day before the company reveals an SEC investigation. c. An officer exercising stock options on the day before the company announces an earnings reversal. d. An officer's son buying stock on the day before the company announces an earnings increase. e. All of the above are violations of 10b. : e 1 Challenging : United States - BUSPROG: Reflective Thinking: Re - BUSPROG: Reflective Thinking : United States - OH - AICPA: BB-Critical Thinking : Insider Trading and Short Swing Profits : Bloom's: Application 131. Which of the following securities sales must be registered? a. a sale of $450,000 in shares to 2,003 residents of Oklahoma and Arkansas b. a sale of $10,000,000 in shares to 353 U.S. residents c. a sale of $50,000,000 in shares to 10 institutional investors located around the United States d. a sale of $50,000,000 in shares to 10,000 residents of Arizona by a company doing business only in Arizona e. All of the above must be registered. : b 1 Challenging : United States - BUSPROG: Reflective Thinking: Re - BUSPROG: Reflective Thinking : United States - OH - AICPA: BB-Critical Thinking : Regulating Primary Offerings: Exemptions : Bloom's: Application 132. When can a company run a tombstone ad? a. only after the securities registration is approved b. only if there is a national registration with the SEC c. only if there is also a blue sky registration d. after the filing of the registration statement e. none of the above : d 1 Moderate : United States - BUSPROG: Analytic : United States - OH - AICPA: BB-Legal : What Must Be Filed: Documents and Information for Registration : Bloom's: Comprehension 133. Who signs the 10-Qs and 10-Ks of publicly trading companies to certify their content? a. CEO b. CFO c. both a and b d. The treasurer or controller of the company. : c 1 Moderate : United States - BUSPROG: Analytic : United States - OH - AICPA: BB-Legal : Periodic Filing Under the 1934 Act: Those Alphabet Reports : Bloom's: Knowledge 134. Which of the following events would be material for purposes of 10b and disclosure? a. a pending merger b. not meeting quarterly earnings expectations c. product liability lawsuit d. a and c only e. all of the above : e 1 Challenging : United States - BUSPROG: Reflective Thinking: Re - BUSPROG: Reflective Thinking : United States - OH - AICPA: BB-Critical Thinking : The 1934 Act Antifraud Provision: 10(b) : Bloom's: Application 135. Under Sarbanes-Oxley, which of the following would be a conflict of interest for the outside auditor of a company? a. Providing management consulting services to the company, too. b. Providing actuarial service to the company, too. c. Designing the company’s financial system. d. all of the above : d 1 Challenging : United States - BUSPROG: Reflective Thinking: Re - BUSPROG: Reflective Thinking : United States - OH - AICPA: BB-Critical Thinking : Violations of the 1933 Act : Bloom's: Application 136. Under Sarbanes-Oxley, how often must the audit partner in charge of an audit client be rotated? a. every year b. every two years c. every five years d. There is no rotation requirement. : c 1 Moderate : United States - BUSPROG: Analytic : United States - OH - AICPA: BB-Legal : Violations of the 1933 Act : Bloom's: Knowledge 137. Pump and dump: a. is a term for downloading music. b. refers to posting stock information on the Internet to increase its value before you sell. c. is not prohibited by the SEC. d. both b and c : b 1 Moderate : United States - BUSPROG: Analytic : United States - OH - AICPA: BB-Legal : The 1934 Act Antifraud Provision: 10(b) : Bloom's: Knowledge 138. Under Sarbanes-Oxley, when must a company file an 8-K? a. every quarter b. annually c. only when selling stock d. within two days of any changes listed in the statute : d 1 Moderate : United States - BUSPROG: Analytic : United States - OH - AICPA: BB-Legal : The 1934 Act Antifraud Provision: 10(b) : Bloom's: Comprehension 139. Under Sarbanes-Oxley, who cannot be a member of an audit committee of a publicly traded company? a. officer b. consultant to the company c. outside lawyer for the company d. all of the above cannot be a member of the company’s audit committee : d 1 Moderate : United States - BUSPROG: Analytic : United States - OH - AICPA: BB-Legal : Violations of the 1933 Act : Bloom's: Comprehension 140. Bernie Madoff used a ___ scheme in his fraud schemes. a. Bait-and-Switch b. Ponzi c. Pump-and-dump d. Poison Pill : b 1 Moderate : United States - BUSPROG: Analytic : United States - OH - AICPA: BB-Legal : The Securities Exchange Act of 1934 : Bloom's: Knowledge 141. Ralph Newsome is an employee at Quest Industries. In the men’s room he overhears two officers discussing a merger that they say will be announced in two days. Ralph purchases 1,000 shares of Quest. When the merger is announced, Quest’s stock has a 15% bounce in value. a. Ralph has engaged in insider trading. b. Ralph simply overheard a conversation and can trade on that information. c. Ralph is not an officer and can trade in advance of announcements. d. none of the above : a 1 Challenging : United States - BUSPROG: Reflective Thinking: Re - BUSPROG: Reflective Thinking : United States - OH - AICPA: BB-Critical Thinking : Insider Trading and Short Swing Profits : Bloom's: Application 142. J. Rooney is Chairman of Rooney, Pace Group, Inc. and has decided to acquire stock in Pantry Pride. Rooney is able to purchase 7 percent of the stock in October 2015. Is Rooney subject to any SEC requirements? Discuss. : Is he trading on inside information? Once he reaches 10 percent, he will be subject to 16b requirements proxy solicitation. 1 Challenging : United States - BUSPROG: Reflective Thinking: Re - BUSPROG: Reflective Thinking : United States - OH - AICPA: BB-Critical Thinking : Insider Trading and Short Swing Profits : Bloom's: Application 143. Lund was the CEO of Verit Co. Lund was contacted by Horowitz, the CEO and Chairman of the Board of P & F. Horowitz told Lund of an opportunity P & F had to buy into a Las Vegas casino. Lund immediately purchased 10,000 shares of P & F. Three days after Lund's purchase, P & F announced its intentions to enter into a joint venture for a Las Vegas casino. Lund was then able to sell his shares for considerable profit. Discuss the propriety of Lund's actions under the 1934 Act. : Lund is a tippee. There is a 10(b) violation. SEC v. Lund, 570 F.Supp. 1397 (C.D.Cal.1983). 1 Challenging : United States - BUSPROG: Reflective Thinking: Re - BUSPROG: Reflective Thinking : United States - OH - AICPA: BB-Critical Thinking : Insider Trading and Short Swing Profits : Bloom's: Application 144. Consider the following transactions by a director of a corporation listed on the National Stock Exchange. September 1, 2015, purchased 100 shares of his company's stock at $10 per share. October 30, 2015, sold the 100 shares of stock for $7 per share. November 30, 2015, purchased 100 shares of his company's stock for $5 per share. Does the director have any liability under 16b? : Yes, SEC matches the highest sale with the lowest purchase; the director had a profit of $200 he owes to the corporation. 1 Challenging : United States - BUSPROG: Reflective Thinking: Re - BUSPROG: Reflective Thinking : United States - OH - AICPA: BB-Critical Thinking : Insider Trading and Short Swing Profits : Bloom's: Application 145. Discuss Goldman Sachs obligation to disclose to its investors its position in the mortgage instrument markets. : Goldman’s view is the clients who purchased instruments from them are sophisticated investors who do not need such a disclosure. The clients’ market positions reflect their knowledge and risk strategies. On the other hand, not all of Goldman’s clients are that knowledgeable, and, since Goldman was shorting, they wanted the market price to decline. That is not what you would expect from sophisticated purchasers. 1 Challenging : United States - BUSPROG: Reflective Thinking: Re - BUSPROG: Reflective Thinking : United States - OH - AICPA: BB-Critical Thinking : Insider Trading and Short Swing Profits : Bloom's: Application 146. Discuss why Bernie Madoff received the sentence he did for his crimes. : Mr. Madoff received 150 years in prison after pleading guilty. Madoff’s high level of harm to so many investors for such a long period of time increased the level of punishment for him. 1 Challenging : United States - BUSPROG: Reflective Thinking: Re - BUSPROG: Reflective Thinking : United States - OH - AICPA: BB-Critical Thinking : The Securities Exchange Act of 1934 : Bloom's: Application 147. Charlie Seam is a broker for a major stockbroker in New York City. Charlie took a job at night with a janitorial firm that is responsible for doing the cleaning on several of the major law firms in New York. These firms also handle the legal business for the largest companies in the United States. Over the past few years these same firms have drafted the documents and done the necessary filings for takeovers among these firms. Charlie has discovered that, as a supervisor, he is able to move freely around the offices and read of developing events on the partners' desks. Through this job Charlie has been able to make some very good investments for himself and his clients. Do Charlie's actions violate 10(b)? : Probably yes because he had no interest in the information and was violating the client's confidence by using the access to the offices for obtaining information. On the other hand, a good argument could be made that Charlie is no different than the printer and that if he happens along on information that is valuable, there is no breach of duty. 1 Challenging : United States - BUSPROG: Reflective Thinking: Re - BUSPROG: Reflective Thinking : United States - OH - AICPA: BB-Critical Thinking : Insider Trading and Short Swing Profits : Bloom's: Application 148. Betty Furnish owns a consignment furniture business that she wishes to expand to several other cities. She does need capital to be able to do so and needs to raise $1 million. Betty says she cannot afford a full SEC registration. Can you offer Betty some suggestions for raising the capital? : Betty could try an intrastate offering if her business will remain in one state. She could also try a short-form registration. Or she could try Regulation D. Rule 504 fits if she registers the offering in her state. If she wants to limit investors, she could try a 505 or 506 offering. She has several options and need not do a full-blown SEC registration. 1 Challenging : United States - BUSPROG: Reflective Thinking: Re - BUSPROG: Reflective Thinking : United States - OH - AICPA: BB-Critical Thinking : Regulating Primary Offerings: Exemptions : Bloom's: Application 149. Explain Goldman Sachs trading huddles and its implications. : Goldman Sachs used trading huddles to combine the efforts of analysts and traders on long and short investments on particular shares. The results of the huddles were then communicated to their own traders and some of their clients; these conclusions were often different from publicly issued Goldman reports and recommendations. Goldman was trying to drive the market, make money for itself, and for some special clients. 1 Challenging : United States - BUSPROG: Reflective Thinking: Re - BUSPROG: Reflective Thinking : United States - OH - AICPA: BB-Critical Thinking : Insider Trading and Short Swing Profits : Bloom's: Application 150. Put the following steps in the securities registration process in chronological order. Experts' opinions Registration filing Red herring prospectus Tombstone ad Offers to sell securities Sale of securities Registration approval : 1. Experts' opinions 2. Registration filing 3. Red herring prospectus 4. Tombstone ad 5. Registration approval 6. Offers to sell securities 7. Sale of securities 1 Challenging : United States - BUSPROG: Analytic : United States - OH - AICPA: BB-Legal : What Must Be Filed: Documents and Information for Registration : Bloom's: Comprehension 151. Describe who must file 10K, 10Q and 8K reports. : Any company listed on a national stock exchange; any company with $10 million or more in assets and 500 or more shareholders. 1 Challenging : United States - BUSPROG: Analytic : United States - OH - AICPA: BB-Legal : Periodic Filing Under the 1934 Act: Those Alphabet Reports : Bloom's: Knowledge 152. Describe shareholders' rights under Section 14. : Shareholders have the right to receive information on upcoming shareholder meetings including the issues and directors to be voted upon. The proxy must contain certain information about compensation, performance and directors and the board committees. In addition, shareholders have the right to submit proposals for action at the meeting. 1 Moderate : United States - BUSPROG: Analytic : United States - OH - AICPA: BB-Legal : Regulating Voter Information - Section 14 : Bloom's: Knowledge 153. Gwen Knight is a CPA who works in the internal controls area of Winthrop Industries, a NASDAQ company. Gwen has discovered that there are problems with the company’s processing of invoices for payments that allow the postponement of those payments. The company is 18 months behind on some payments. Gwen reports the problems to her supervisor. Gwen assumes that her supervisor will notify the head of internal audit and take the appropriate corrective steps. On her next performance evaluation, done three weeks later, Gwen receives her first poor rating in 10 years. She is put on a six-month performance improvement plan. Discuss Gwen’s position, rights, and any protections she may have. : Gwen works for a publicly traded company and so is protected by the anti-retaliation provisions of SOX. It seems that she has been targeted for raising an issue on financial reporting. Gwen has the right to file a complaint for retaliation. 1 Challenging : United States - BUSPROG: Reflective Thinking: Re - BUSPROG: Reflective Thinking : United States - OH - AICPA: BB-Critical Thinking : Violations of the 1933 Act : Bloom's: Application 154. A shareholder who was buying additional shares in Wayport, Inc., told the shareholder seller “he was not aware of any bluebirds of happiness in the corporation's world.” However, at the time the buyer made the statement he was aware that the CEO had informed the board via e-mail of a patent sale by Wayport that meant that the corporation would receive net proceeds of $7.6 million and would increase its year-end cash position by 22%. Which of the following statements is correct? a. The statement was too general to constitute a basis for a 10(b) claim. b. The statement would need to contain numbers to be a material misrepresentation. c. The buyer has done nothing wrong unless he was the CEO or a member of the board. d. The seller has a 10(b) claim against the buyer. : d 1 Challenging : United States - BUSPROG: Reflective Thinking: Re - BUSPROG: Reflective Thinking : United States - OH - AICPA: BB-Critical Thinking : Insider Trading and Short Swing Profits : Bloom's: Synthesis 155. The executive vice president for Best Buy appeared on television in an interview about how Best Buy was doing because of concerns about the abrupt departure of the company’s CEO. The executive vice president said, “Customers are lining up at our stores and television sales are going really strong.” Which of the following is correct about the EVP’s statements? a. The statement was too general to constitute a basis for a 10(b) claim. b. The statement does need to contain numbers to be a material misrepresentation. c. The buyer has done nothing wrong unless he was told to not reveal that information. d. The seller has a 10(b) claim against the seller. : a 1 Challenging : United States - BUSPROG: Reflective Thinking: Re - BUSPROG: Reflective Thinking : United States - OH - AICPA: BB-Critical Thinking : Insider Trading and Short Swing Profits : Bloom's: Synthesis 156. Under the new securities rules issued under the JOBS Act, which of the following companies would need to register its securities under the 1934 Securities Exchange Act for purposes of periodic reporting? a. A company with $5 million in assets and 2,000 shareholders. b. A company with $10 million in assets and 1,500 shareholders. c. A company with $10 million in assets, 2,000 shareholders, and 550 non-accredited shareholders. d. A company with $10 million in assets, 2,000 shareholders, and 500 non-accredited investors. : d 1 Challenging : United States - BUSPROG: Reflective Thinking: Re - BUSPROG: Reflective Thinking : United States - OH - AICPA: BB-Critical Thinking : Securities Registration : Bloom's: Synthesis 157. Directors A and B of a large, publicly traded company filed advance reports of their plans to sell stock. Such advanced filed plans allow directors and officers to sell shares without having to worry about whether they have inside information at the time of the sale. The dates for their sales are locked in for one year. Directors A and B have, however, encouraged the CEO to announce a boost in sales and revenues prior to the quarterly financial statement release because such an announcement would allow the information to go public and thereby allow them to sell their shares, according to their prior-approved plan, at a much higher price. Which of the following is correct? a. Directors A and B have engaged in insider trading. b. Directors A and B have violated their fiduciary duty as directors by requesting the advance announcement. c. Directors A and B have violated Section 16(b). d. Directors A and B have not violated 10(b). : d 1 Challenging : United States - BUSPROG: Reflective Thinking: Re - BUSPROG: Reflective Thinking : United States - OH - AICPA: BB-Critical Thinking : Insider Trading and Short Swing Profits : Bloom's: Synthesis 158. The following stock transactions were completed by the executive vice president of Vinco, Inc., a publicly traded corporation: January 12, 2015 - EVP sells 100 shares @ $40 per share May 5, 2015 - EVP buys 100 shares @ $20 per share June 1, 2015 - EVP sells 100 shares @ $30 per share Which of the following statements is correct? a. EVP has a short-swing profit of $2,000. b. EVP has a net loss of $1,000. c. EVP has a short-swing profit of $1,000. d. EVP has a short-swing profit of $3,000. : a 1 Challenging : United States - BUSPROG: Reflective Thinking: Re - BUSPROG: Reflective Thinking : United States - OH - AICPA: BB-Critical Thinking : Insider Trading and Short Swing Profits : Bloom's: Synthesis

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