Ch 1 Exercises

Question 1

The SEC has five divisions. Using www.sec.gov as a starting point, name these five divisions.

Answer 1

1) Division of Corporation Finance
2) Division of Enforcement
3) Division of Investment Management
4) Division of Economic and Risk Analysis
5) Division of Trading and Markets

Question 2

Which division would you expect to issue guidance to companies for complying with SEC reporting requirements?

Answer 2

Division of Corporation Finance

This Division assists companies with SEC rules and forms, in addition to making recommendations to the Commission regarding new rules.

Question 3

Summarize the charges brought by the SEC against Elizabeth Holmes, Ramesh Balwani, and Theranos, Inc.

Answer 3

False pretenses about Theranos’ technology, business, and financials.

All were charged with violating Section 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5.

Balwani was additionally charged with aiding and abetting Theranos and Holmes in their violations of these provisions.

Question 4

Describe how the charges against Elizabeth Holmes, Ramesh Balwani, and Theranos, Inc. fit with the SEC’s mission.

Answer 4

The SEC is protecting those investors who were wronged by the company’s actions by bringing charges against the fraudsters.