FAR - Framework/Overview - U.S. SEC

Question 1

Mission of SEC

Answer 1

protect investors; maintain fair, orderly, and efficient markets; and facilitate capital formation.

In order to carry out the mandates in the Securities Act of 1933, the SEC is ensuring that investors are provided with adequate information on which to base investment decisions.

Question 2

TRUE/FALSE

Foreign businesses can register on u.s. exchange?

Answer 2

TRUE

Foreign private issuers in the U.S. markets can file their financial statements using IFRS issued by the IASB since 2008.

Question 3

What is an eligible foreign private investor

Answer 3

any foreign issuer who is NOT:

1) a part of foreign gov’t

and meets the following conditions:

2) More than 50% of the outstanding voting securities are directly or indirectly owned by residents of the U.S., and

Any of the following:

a) business is administered principally in the U.S.
b) More than 50% of the assets are located in U.S.
c) majority of its executive officers or directors are U.S. citizens or residents.

Rule 205, Securities Act 1933

Question 4

What are sec pronouncements and which is most formal and has impact on public companies?

Answer 4

Financial reporting release - main sec pronouncements, need to be followed by public firms

staff acct bulletin (sab) - position on technical issues

acct/audit enforcement release (aaer) - reports enforcement issues

Question 5

True/false

president appoints 5 sec commissioners

Answer 5

true

Question 6

what are the 4 divisions of sec and define

Answer 6

corp finance - oversee compliance with securities acts, examine public co. filings

enforcement - investigate & make punishment recommendations

trading/markets - oversee secondary markets, exchanges, brokers, dealers

investment mgt - oversee investment companies/advisors under 1940 acts

Question 7

define large accelerated, accelerated, and non-accelerated filers as well as filing deadlines for 10-k and 10-q.

Answer 7

large acc. > $700 M equity
10-k 60 days after fiscal EOY
10-q, 40 days after quarter end

Acc. = 75 M > X > 700 M
10-k, 75 days after fiscal EOY
10-q, 40 days after quarter end

non-acc = X

Question 8

S-X and S-K governance

Answer 8

S-x - govern form and content of financials

s-k - govern form and content of non-financials

Question 9

1933 Act

Answer 9

require a firm to file a registration statement and provide investors with proxy statements (info about elections)

Question 10

1934 Act

Answer 10

regulation of trading securities and requirements for periodic reporting and disclosures

Question 11

prospective financial information

Answer 11

financial information about the future

Question 12

what is 10-k, 10-q, 8-k?

Answer 12

10-q - reviewed quarterly info by an independent auditor

10-k - annual filings audited by an independent auditor

8-k - info about significant events that affect a company