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1. The states did not have federal legislation prior to the time of the federal securities laws.
a. True
b. False
2. A primary offering is a first-time offering of shares for sale.
a. True
b. False
3. A bond is not considered a security under federal law.
a. True
b. False
4. A limited partnership interest is not considered a security.
a. True
b. False
5. The 1933 Securities Act regulates primary offerings.
a. True
b. False
6. The 1934 Securities Exchange Act regulates the secondary sale of securities.
a. True
b. False
7. Municipal bonds are exempt from SEC requirements.
a. True
b. False
8. The intrastate registration exemption requires that 100 percent of the offerees be residents of the same state as the
issuer.
a. True
b. False
9. The intrastate registration exemption requires that 100 percent of the issuer's assets be located in its resident state.
a. True
b. False
10. Regulation A short-form exemptions can be used for offerings of $5 million or less.
a. True
b. False
11. Registration integration can produce a cumulative violation of several small offerings.
a. True
b. False
12. An accredited investor includes any corporation.
a. True
b. False
13. A natural person whose net worth is greater than $1 million is an accredited investor.
a. True
b. False
14. All Regulation D offerings can be sold through advertising.
a. True
b. False
a. True
b. False
15. The SEC prohibits an analyst from issuing a report that is contrary to the analyst’s true opinion about a security.
a. True
b. False
16. Rule 505 carries a 35-purchaser maximum (excluding accredited investors).
a. True
b. False
17. A bank is an example of an accredited investor for purposes of Regulation D.
a. True
b. False
18. Rule 506 has no dollar limitations.
a. True
b. False
19. Rule 504 has no limitations on number of offerees.
a. True
b. False
20. Rule 506 carries a 35-purchaser maximum (excluding accredited investors).
a. True
b. False
21. Shareholder proposals that call for a shareholder vote on compensation are proper under SEC rules.
a. True
b. False
22. There are no resale limitations on Regulation A offerings.
a. True
b. False
23. A tombstone ad can be run before the registration statement is effective.
a. True
b. False
24. The SEC conducts a merit review of its filed registrations.
a. True
b. False
25. A red herring is a prospectus sent prior to the effective date of the registration date.
a. True
b. False
26. Section 11 of the 1933 Securities Act imposes liability for the failure to file a registration statement.
a. True
b. False
27. Only directors can be held liable for a Section 11 violation.
a. True
b. False
28. Only those who actually signed the registration statement can be liable for a Section 11 violation.
a. True
b. False
29. The due diligence defense is one that is easy to establish.
a. True
b. False
30. A Section 12 violation results from making a material misstatement in a registration statement.
a. True
b. False
31. Selling securities before the effective date of the registration statement is a Section 12 violation.
a. True
b. False
32. A company registered on the New York Stock Exchange must file a 10-Q report.
a. True
b. False
33. Section 10(b) applies to all securities sold in interstate commerce.
a. True
b. False
34. Section 10(b) applies to corporate insiders and tippees.
a. True
b. False
35. Only an actual seller or purchaser can bring a suit for civil recovery under 10(b).
a. True
b. False
36. Section 16 applies to all stock transactions of directors and officers (of a 1934 Act company).
a. True
b. False
37. Registration statements must include audited financial statements.
a. True
b. False
38. The federal securities laws do not apply to proxy solicitation.
a. True
b. False
39. Blue sky laws are state securities registration laws.
a. True
b. False
40. A merit review standard is the same as the SEC review.
a. True
b. False
41. Section 10(b) violations carry fines of only $10,000.
a. True
b. False
42. A limited partnership interest is not considered a security.
a. True
b. False
43. Section 12 violations would include selling before the effective date.
a. True
b. False
44. A false prospectus is covered under Section 11.
a. True
b. False
45. All companies required to register under the 1934 Act must file a 10-K report.
a. True
b. False
46. Regulation A filings are exempt from Section 11 liability.
a. True
b. False
47. A registration approved by the SEC need not be registered at the state level.
a. True
b. False
48. Bernie Madoff was sentenced to 50 years in prison for his fraud convictions.
a. True
b. False
49. Shares of stock issued pursuant to a corporate reorganization must be registered.
a. True
b. False
50. Under Section 14, shareholders can make proposals for action in the proxy materials.
a. True
b. False
51. The intrastate exemption violates the commerce clause.
a. True
b. False
52. Insider trading rules apply only to officers and directors.
a. True
b. False
53. Short-swing profits are acceptable if there was no inside information.
a. True
b. False
54. Shares issued through reorganizations must be registered.
a. True
b. False
55. Laddering is a safe-harbor section of the 1934 Act.
a. True
b. False
56. A merger is the combination of two firms into one of the old firms.
a. True
b. False
57. A horizontal merger is a merger among competitors.
a. True
b. False
58. In a consolidation, a new firm is established.
a. True
b. False
59. A tender offer is another form of business combination.
a. True
b. False
60. A hostile takeover is one supported by management.
a. True
b. False
61. Asset acquisitions are not subject to any federal regulation.
a. True
b. False
62. The Williams Act only applies to National Stock Exchange companies.
a. True
b. False
63. A company filing Williams Act materials is not required to file proxy materials.
a. True
b. False
64. State laws regulating tender offers are unconstitutional.
a. True
b. False
65. State antitakeover statutes that delay takeovers are unconstitutional.
a. True
b. False
66. Only a small minority of states have antitakeover statutes.
a. True
b. False
67. To qualify for an intrastate offering exemption, the shares must contain transfer restrictions.
a. True
b. False
68. An IPO does not require SEC registration.
a. True
b. False
69. Shelf registration is good for a maximum of two years, provided there are regular filings such as the 10K.
a. True
b. False
70. The due diligence defense to Section 11 is difficult to prove.
a. True
b. False
71. Shareholder proposals can include topics such as executive compensation.
a. True
b. False
72. Publicly traded companies can no longer issue non-GAAP financial statements.
a. True
b. False
73. The penalties for certification of false financial statements are up to $1 million in fines and/or 10 years.
a. True
b. False
74. Earnings management is a key area of SEC investigation and enforcement.
a. True
b. False
75. PCAOB consists of five presidential appointees.
a. True
b. False
76. Accounting firms must register annually with PCAOB if they want to audit publicly traded companies.
a. True
b. False
77. Black-out periods are timeframes in which trading by company employees is prohibited.
a. True
b. False
78. Short-swing profit rules apply only to officers and directors.
