Brainscape's Knowledge GenomeTM

Browse over 1 million classes created by top students, professors, publishers, and experts.


See full index

Legal Environment of Business (10-17) > Chapters 10-17 Final > Flashcards

Chapters 10-17 Final Flashcards

1
Q

Blue sky laws

A

state regulations regarding securities laws

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
2
Q

controlling person

A

the one who controls or is controlled by the issuer (eg major stockholder)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
3
Q

issuer

A

individual/business organization offering a security to the public for sale

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
4
Q

underwriter

A

anyone who participates in the original distribution of securities (eg selling or guarantying their sale)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
5
Q

seller

A

anyone who contracts with a purchaser or a motivating influence to cause the transaction to occur

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
6
Q

due diligence defense

A

defense against civil liability in securities violations that claims a proper investigation of the financial statements and controlling persons that gave no indication of the presence of false or misleading information in the registration statement

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
7
Q

defenses recognized in the Securities Act of 1933

A

materiality, statute of limitations due diligence

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
8
Q

statute of limitations defense

A

defense against civil and criminal liability in securities violations regarding the time frame of one year (up to 3 max) that begins at the discovery of the untrue statement/omission or at the time a reasonable person would have discovered it

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
9
Q

materiality defense; material def.; material fact

A

defense against civil and criminal liability in securities violations that claims the untrue or misleading statement was not material to the purchasers decision making process; material is defined as the average information a prudent investor would need to make a knowledgeable decision; material fact is a fact that if disclosed would deter or tend to deter the average prudent investor from purchasing

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
10
Q

insider

A

owns more than 10% of the security; is a director or an officer of the issuer of the security

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
11
Q

misappropriation theory

A

individuals can be held liable if they misappropriate nonpublic information from a source they have a fiduciary duty to or use that information to trade securities for personal gain/tip others to trade on said information

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
12
Q

prefiling period

A

period before filing the registration statement where negotiations may be made but securities may NOT be sold

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
13
Q

waiting period

A

period after filing the registration statement where the SEC confirms the information filed and whether to permit sales; still illegal to sell; typically 20 days

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
14
Q

post effective period

A

after the waiting period at which the registration becomes effective and securities can be sold and bought

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
15
Q

registration statement

A

statement containing a detailed disclosure of financial information about the issuer and controlling individuals involved

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
16
Q

SEC

A

securities exchange commission; administrative agency created in 1934 responsible for administering federal securities law

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
17
Q

purpose of Securities Act of 1933 and sanctions

A

requires disclosure of all relevant information to potential investors/buyers; criminal punishment, civil liability, equitable remedy of an injunction

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
18
Q

security

A

a interest/instrument that offer the right to subscribe to or purchase stock, bond, or any certificate of interest; any investment of money to be managed by another with the prospect of profit

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
19
Q

prospectus

A

a document given to any potential investor containing financial information related to the issuer and controlling persons

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
20
Q

Section 11 Liability

A

liable if the registration statement contains untrue statements of material facts, omits material facts required by the statute or regulation, omits information that make the content misleading

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
21
Q

Section 12 Liability

A

liable if offering securities not registered with the SEC or hosting untrue or misleading statements within the prospectus

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
22
Q

Section 17 Liability

A

liable for the offer or sale of any securities with the result of defrauding, obtain money/property through an untrue/misleading statement, or engaging in business that may defraud/deceive a purchaser; required to prove intent

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
23
Q

scienter

A

intent to deceive or mislead regarding securities transactions

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
24
Q

SEC Act (1934)

A

applies to the exchanges after the initial sale, prohibiting sale of unregistered securities and requires registration with the stock exchange and the SEC

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
25
Q

short-swing profits

A

profits made from the sale/purchase of security within six months considered illegal under Section 16

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
26
Q

tippee

A

person who learns of nonpublic information from an insider

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
27
Q

Section 10 (b)

A

Liability for the use of mail or any instrument of interstate commerce to defraud anyone in connection with the sale/purchase of a security

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
28
Q

Section 16(b)

A

liability for any insider making profit from the purchase/sale of security within a six month period

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
29
Q

Section 18

A

liability for fraudulent filing of false or misleading documents with the SEC or exchange

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
30
Q

Sherman Act, Section 1

A

prohibits contracts, combinations, and conspiracies that unreasonable restrain trade or commerce

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
31
Q

Sherman Act, Section 2

A

prohibits monopolization or attempts to monopolize a market

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
32
Q

Federal Trade Commission Act

A

created the Federal Trade Commission responsible for keeping competition free and fair

33
Q

agencies that enforce antitrust laws

A

FTC & DOJ (Department of Justice

34
Q

goal of the Sherman Act

A

competition

35
Q

price fixing

A

competitors agreeing to charge the same price for a product/service

36
Q

horizontal restraints

A

agreements between direct competitors

37
Q

vertical restraints

A

agreements between firms in a production or distribution chain

38
Q

categories of antitrust analysis

A

rule of reason & per se illegality

39
Q

rule of reason

A

only undue/unreasonable restraints of trade are illegal

40
Q

test of reasonableness

A

based on (1) the nature/character of the contracts and (2) the surrounding circumstances giving rise to the interference or the presumption that the intent was to restraint trade/enhance prices

41
Q

per se illegality

A

agreements that have such an extreme effect on competition that deciding the exact harm done is unnecessary

42
Q

horizontal price fixing

A

competitors agreeing to set the same price in a fashion that threatens free competition

43
Q

defense against price fixing

A

two competitions entering a joint venture and setting a price

44
Q

vertical price fixing

A

manufacturers attempting to control the ultimate retail price of their products

45
Q

horizontal territorial agreement

A

competing businesses agreeing to delegate a certain geographic territory to each other

46
Q

vertical territorial agreement

A

agreement between a manufacturer and dealer/distributor that the manufacturer will not sell to other dealers as long as the dealer does not operate outside of the given territory

47
Q

concerted activities

A

conduct between competitors that are anti-competitive

48
Q

burden of proof for monopolization

A

(1) proof of monopoly power and (2) willfully acquired and maintained that power

49
Q

burden of proof for attempt to monopolize

A

(1) proof of intent to destroy competition or achieve monopoly power and (2) a dangerously likelihood that monopolization would occur

50
Q

burden of proof for conspiracy to monopolize

A

(1) proof of specific intent to monopolize and (2) at least one overt act to try an acquire monopoly power

51
Q

predatory pricing

A

when a business makes prices below cost in order to drive out competition

52
Q

Sherman Act Sanctions

A
  1. criminal fines and imprisonment
  2. enjoined by the courts
  3. injured parties may receive up to triple damages
  4. any property owned in violation of Sherman Act Section 1 being moved from one state to another is subject to seizure and forfeiture to the US
53
Q

state action exemption

A

the Sherman Act does not apply to the state government

54
Q

Noerr-Pennington Doctrine

A

lobbying government officials is exempt

55
Q

Clayton Act Section 2

A

unlawful for a seller to discriminate in the price that is charged to different purchasers when the effect may be to lessen competition substantially or tend to create a monopoly

56
Q

Robinson-Patman amendment

A

attempts to ensure quality of price to all buyers; illegal to willingly give or accept benefits of this discrimination; applies to interstate commerce and the sale of goods only

57
Q

Clayton Act defenses

A

changing condition defense (prices are in response to changing conditions such as perishable goods), cost justification defense (prices are in response to the differences in the manufacture, cost, or delivery), good-faith meeting-of-competition defense (prices are in response to meeting the equally low prices of a competitor in good faith)

58
Q

tying contract

A

when one product can only be bought or leased through to purchase/lease of another product; requirement of using power in one market to extend to the other

59
Q

full-line forcing

A

seller compelling a buyer to buy a full line of products by not allowing purchase of a singular item

60
Q

reciprocal dealing

A

when two parties make an agreement to only buy the other’s goods if they buy theirs

61
Q

exclusive dealing

A

contract that contains a provision that one party will only deal with the other

62
Q

requirements contract

A

a buyer agrees to purchase all of its needs of a given contract from a seller during a certain period of time

63
Q

Clayton Act Section 7

A

makes certain acquisitions and mergers illegal

64
Q

mergers

A

classified as horizontal, market extension, vertical, or conglomerate

65
Q

market extension merger

A

acquisition in which the acquiring company extends its markets

66
Q

horizontal merger

A

combines two companies within the same field or industry

67
Q

product extension

A

expanding to a new product

68
Q

geographical extension

A

expanding to a new area

69
Q

vertical merger

A

combines one company that is the customer of another in the lines of commerce in which the other is a supplier

70
Q

conglomerate merger

A

when the combining companies are not competitors nor are related as customer and supplier in any line of commerce

71
Q

Herfindahl-Hirschman Index (HHI)

A

measurement of market concentration by adding the market share of each firm

72
Q

Concentrated HHI

A

HHI over 2,500 or that increases by 200 points

73
Q

Other merger considerations

A

evidence from existing mergers, whether the merging firms substantially competed, and if there was a positive disruption for consumers that will now be quieted

74
Q

premerger notification

A

the FTC and DOJ must be notified and given 30 days to conduct a review

75
Q

Federal Trade Commission Act Section 5

A

“unfair methods of competition” and “unfair or deceptive acts or practices in commerce” are unlawful

76
Q

Three questions to determine unfair methods of competition

A
  1. Does it injure consumers significantly?
  2. Does the conduct offend already standing public policy?
  3. Is the conduct oppressive, unscrupulous, immoral, or unethical?
77
Q

Purpose of FTC Act Section 5

A

To criminalize conduct that falls short of a Sherman Act or Clayton Act violation

78
Q

International Antitrust Enforcement

A

any foreign business practices that have a substantial effect on US commerce must comply with US antitrust laws

Legal Environment of Business (10-17) (1 decks)

Brainscape helps you reach your goals faster, through stronger study habits.
© 2025 Bold Learning Solutions. Terms and Conditions