58) Which of the following is true of Section 24 of the Securities Act of 1933?
A) It imposes civil liability on any person who violates the provisions of Section 5 of the act.
B) It imposes criminal liability on any person who willfully violates the 1933 act or the rules or
regulations adopted.
C) It imposes civil liability on persons who intentionally defraud investors by making
misrepresentations of material facts in the registration statement.
D) It exclusively regulates the sale of securities online.
59) Which of the following has the largest trading volume of any securities exchange in the
world?
A) NYSE
B) Euronext
C) NASDAQ
D) London Stock Exchange
60) The electronic data and record system of the Securities and Exchange Commission is known
as ________.
A) EDGAR
B) NASDAQ
C) MICEX
D) SPSE
61) Which of the following is true of exempt securities?
A) Only the federal government can issue exempt securities.
B) Once a security is exempt, it is exempt forever.
C) An exemption notice must be filed with SEC every time the exempt security is transferred.
D) Exempt securities cannot be traded publicly.
62) Which of the following is an example of exempt securities?
A) stock dividends and stock splits
B) IPOs made by multi-national corporations
C) securities that has been held by a single investor for longer than a year
D) securities worth $1 million or more
63) A(n) ________ is an exemption from registration which states that securities transactions not
made by an issuer, an underwriter, or a dealer do not have to be registered with the SEC.
A) intrastate offering exemption
B) private placement exemption
C) regulation A offering
D) nonissuer exemption
64) A(n) ________ is an exemption from registration that permits local businesses to raise
capital from local investors to be used in the local economy without the need to register with the
SEC.
A) intrastate offering exemption
B) regulation A offering
C) private placement exemption
D) nonissuer exemption
65) SEC Rule 506 is known as the ________.
A) nonissuer exemption
B) intrastate offering exemption
C) private placement exemption
D) interstate offering exemption
66) Which of the following is true of small offering exemptions?
A) Securities coming under this exemption cannot be advertised to the public.
B) Securities coming under this exemption can only be sold to accredited investors.
C) Securities coming under this exemption can only be bought by nonaccredited investors.
D) Securities coming under this exemption have no resale restrictions imposed on them.
67) Which of the following is enough to prove a violation of Section 10(b) and Rule 10b-5?
A) nonexemption status
B) scienter
C) aiding and abetting
D) negligent conduct
68) The ________ is a federal statute that permits the SEC to obtain a civil penalty of up to three
times the illegal benefits received from insider trading.
A) Securities Act
B) Securities Exchange Act
C) Insider Trading Sanctions Act
D) SEC Rule 506
69) Which of the following constitutes insider trading?
A) an employee makes a profit by personally purchasing shares of the corporation prior to public
release of favorable information
B) a manager purchases all shares of a corporation available to the public
C) a director purchases enough shares of a public company to gain a majority stake in its
management
D) an employee sells his shares of the company to another employee without notice to the
company
70) A(n) ________ is a person who discloses material nonpublic information to another person.
A) issuer
B) tippee
C) grantor
D) tipper
71) The ________ imposes liability under Section 10(b) and Rule 10b-5 on an outsider who
misappropriates information about a company, in violation of his or her fiduciary duty, and then
trades in the securities of that company.
A) Insider Trading Sanctions Act
B) Sarbanes-Oxley Act
C) tort of appropriation
D) misappropriation theory
72) Who among the following is considered a statutory insider?
A) Sharon Muller, an editor who was tipped by her friend to buy shares of KYU Corp.
B) Robert Morgan, a government employee who owns ten percent of all equity security of KYU
Corp.
C) Jim Downey, a graphics engineer who quit KYU Corp. after five years of service
D) Kate Harris, a legal consultant to KYU Corp.
73) Which of the following best defines short-swing profits?
A) profits that are made by an insider by selling shares of the corporation prior to the public
disclosure of unfavorable information
B) profits that are made by an insider by personally purchasing shares of the corporation prior to
public release of favorable information
C) profits that are made by a statutory insider on trades involving equity securities of their
corporation that occur within six months of each other
D) profits that are made by a tippee by personally purchasing shares of the corporation prior to or
post public release of favorable information
74) ________ requires that any profits made by a statutory insider on transactions involving
short-swing profits belong to the corporation.
A) Section 5 of the Securities Act of 1933
B) Section 12 of the Securities Act of 1933
C) Section 16(b) of the Securities Exchange Act of 1934
D) SEC Rule 10b5-1
75) The Dodd-Frank Wall Street Reform and Consumer Protection Act imposes regulations on
________.
A) hedge funds and derivatives
B) stock dividends and splits
C) interests in realty
D) restricted securities
76) The ________ coordinates state securities laws with federal securities laws.
A) Insider Trading Sanctions Act
B) Securities Act of 1934
C) Securities Act of 1933
D) Uniform Securities Act
77) How does a company sell its shares to the public for the first time? Explain the contents of a
registration statement.
78) List the securities exempt from registration with the SEC.
79) Distinguish between nonissuer exemption, intrastate offering exemption, and private
placement exemption.
80) What is insider trading? How is it regulated in the U.S.A?
81) How does Section 16(b) of the Securities Exchange Act of 1934 protect the interests of a
corporation? Explain with an example.
82) The ________ is a federal statute that primarily regulates the issue of securities by
companies and other businesses.
83) Insider trading in the purchase and sale of securities in the after markets is prohibited under
the statute of the ________.
84) The ________ is a federal agency that is created by the Securities Exchange Act of 1934 and
it is empowered to administer federal securities laws.
85) The Securities and Exchange Commission is an administrative agency composed of five
members who are appointed by the ________.
86) The SEC provides a(n) ________ which allows a person who provides information that leads
to a successful SEC action to recover 10 percent to 30 percent of the monetary sanctions over $1
million recovered by the SEC.
87) Debentures are an example of ________ securities.
88) Interests or instruments that are expressly mentioned in securities acts are ________
securities.
89) The courts apply the Howey test in determining whether an arrangement is a(n) ________
and therefore a security.
90) The sale of securities by an issuer to the public is known as ________.
91) Issuers with offerings exceeding $100,000 must file a(n) ________ with the SEC.
92) A(n) ________ issued by the SEC indicates that a defendant agrees not to violate securities
laws in the future but does not admit to having violated securities laws in the past.
93) An exemption from registration which states that securities transactions not made by an
issuer, an underwriter, or a dealer do not have to be registered with the SEC is known as known
as a(n) ________ exemption.
94) The Securities Act of 1933 provides a(n) ________ exemption that permits local businesses
to obtain from local investors capital to be used in the local economy without the need to register
with the SEC.
95) Rule 506–known as the private placement exemption–allows issuers to raise capital from an
unlimited number of ________ without having to register the offering with the SEC.
96) ________ occurs when a company employee or company advisor uses material nonpublic
information to make a profit by trading in the securities of the company.
97) A(n) ________ is a financial instrument whose value is determined by the price movements
of another asset.