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Regulation > 2.2 - Securities Exchange Act of 1934 > Flashcards

2.2 - Securities Exchange Act of 1934 Flashcards

1
Q

Securities Exchange Act of 1934

What does the Securities Exchange Act of 1934 address?

HINT: DAI

A
  • Disclosures
  • Anti-fraud reporting
  • Insider trading
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2
Q

Securities Exchange Act of 1934

Who or what governing body created the Securities Exchange Commission or SEC?

A

Securities Exchange Act of 1934

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3
Q

Securities Exchange Act of 1934

What powers do the SEC have?

HINT: (6) DSIICI

A
  • Deny, suspend or revoke registration
  • Suspend trading
  • Issue rules
  • Investigate violations
  • Conduct hearings to decide whether violations have occurred
  • Impose penalties
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4
Q

Securities Exchange Act of 1934

What does the 1933 Act do?

A
  • Regulates initial offerings
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5
Q

Securities Exchange Act of 1934

What does the 1934 Act do?

A
  • Regulates ongoing reporting
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6
Q

Securities Exchange Act of 1934

What companies are required to register under the 1934 Act?

HINT: (5)

A
  • All regulated, public held companies
  • Companies with listed securities
  • Shareholder > 500 and assets > $10 million
  • Any 1933 registered companies must register under the 1934 Act as well
  • National Securities Exchanges
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7
Q

Securities Exchange Act of 1934

Identify the organizations exempt from the 1934 Act

A
  • Charitable organizations
  • Investment companies
  • Savings & Loans
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8
Q

Securities Exchange Act of 1934

What are the registration filing requirements under the Securities Exchange Act of 1934?

HINT: 7 FCFSIDD

A
  • Financial statements
  • Corporate organization
  • Financial structure
  • Security description
  • Important individuals
  • Description of business
  • Description of bonus / profit sharing arrangement
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9
Q

Securities Exchange Act of 1934

Define “important individuals” who are required to be listed on the registration documents under the Securities Exchange Act of 1934.

A
  • Names of officers, directors & large shareholders over 10% of firms outstanding stock
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10
Q

Securities Exchange Act of 1934

Identify the reporting forms required of listed companies under the Securities Exchange Act of 1934

A
  • Form 10-K – annual report
  • Form 10-Q – quarterly report
  • Form 8-K – current report
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11
Q

Securities Exchange Act of 1934

What forms or reports must be included in the Form 10-k annual report?

A
  • Financial statements,
  • Business reports including stock prices & management analysis
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12
Q

Securities Exchange Act of 1934

When is the Form 10-k annual report required to be filed?

A
  • Must be filed 60-90 days after year end
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13
Q

Securities Exchange Act of 1934

What information must be included in the quarterly Form 10-Q report and when is it due?

A
  • Reviewed financial statements,
  • key changes during the quarter
    • Due 40-45 days after quarter end
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14
Q

Securities Exchange Act of 1934

What information must be included in the Form 8-k current report and when is it due?

HINT: CABCC

A
  • Control change
  • Acquisition
  • Bankruptcy
  • Change of director
  • Change in auditor
    • must be filed within 4 days of key events
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15
Q

Securities Exchange Act of 1934

Define “insiders”

A
  • Officers, directors and beneficial owners of 10% or greater of the stock of a corporation
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16
Q

Securities Exchange Act of 1934

What is a proxy?

A

power of attorney given by a shareholder to a 3rd party authorizing the party to exercise the voting rights of the shares

17
Q

Securities Exchange Act of 1934

When must an issuing company file a copy of the proxy with the SEC?

A

10 days prior to mailing a proxy statement to shareholders

18
Q

Securities Exchange Act of 1934

What is a tender offer?

A

general invitation by an individual or a corporation to all shareholders of another corproation to tender their shares for a specified price

19
Q

Securities Exchange Act of 1934

What are the repercussions of insiders for noncompliance under the 1934 Act?

A

criminal penalties

20
Q

Securities Exchange Act of 1934

What form are insiders required to file with the SEC under the 1934 Act?

A
  • Form 3 – initial filing
  • Form 4 – changes
  • Form 5 – annual statement
21
Q

Securities Exchange Act of 1934

When are insider forms required to be filed with the SEC?

A
  • Form 5 - annual statement
    • within 45 days after the company’s fiscal year end
  • On the 2nd business day following the day on which the insider engaged in a transaction in the company’s equity securities
  • All other forms
    • within 10 days of becoming an insider
22
Q

Securities Exchange Act of 1934

Define “insider trading” under Rule 10B-5 Antifraud Provisions

A
  • the purchase or sale of any security by an individual who:
    • Has access to material, nonpublic information
    • Has not disclosed it before trading
    • Has a fiduciary obligation to the issuer, shareholders or any other source of the information
23
Q

Securities Exchange Act of 1934

Provide examples of “insiders” for 10B-5 purposes

A
  • Corporate officers
  • Lawyers
  • Auditors
  • Other parties
    • Tippers, recipients of info from insiders & employees of government agencies entrusted with confidential corporate information)
24
Q

Securities Exchange Act of 1934

What are “short-swing” profits?

A
  • Profits from sale or purchase of issuer stock within 6-month period
25
Q

Securities Exchange Act of 1934

Define “profit” per share in the case of short-swing profits under the 1934 act

A

the excess of the highest sales price over the lowest purchase price during the period

26
Q

Securities Exchange Act of 1934

True or False >>>

Under Section 16(b) of the 1934 Act, insiders may be sued for short-swing profits on registered equity securities by the issuer or a shareholder suing on behalf of the corporation if the issuer does not sue within 60 days after a request

A

True

27
Q

Securities Exchange Act of 1934

Is strict liability imposed on insiders for short-swing profits?

A

Yes - proof is not necessary

28
Q

Securities Exchange Act of 1934

Define strict liability

A
  • liability that does not depend on actual negligence or intent to harm

Regulation (67 decks)

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