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REG > FEDERAL LAWS & REGS > Flashcards

FEDERAL LAWS & REGS Flashcards

1
Q

What does 1933 Act apply to?

A

Sales, stocks, bonds & notes for period over 9 months

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2
Q

After registering with SEC, how long is the waiting period and what actions can be made?

A

20 days

preliminary or “red herring” prospectus can be issued

Tombstone ad can be placed

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3
Q

3 periods when filing with SEC

A

pre-filing - no offer or sales
waiting period - oral offers, some written, no sales
post - effective - offer and sales

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4
Q

Under 1933 Act, what must be disclosed in registration statement?

A
  1. description of the security
  2. how the corp will use the proceeds from the sale
  3. descriptions of registrant’s business and managemen
  4. financial statement & prospectus
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5
Q

3 types of exempt securities

A
  1. small offer - pose small threat to public
  2. private placement - accredited investors only
  3. interstate offerings - contained within one state and only subject to that states rules
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6
Q

Regulation D

A

permits exempt offerings to be sold to both accredited and non-accredited investors (without having to file with the SEC)

Still must be notified within 15 days of first sale

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7
Q

Rule 504 Regulation D

A

small companies
raise up to $1 million in 12 months
can be sold to anyone - no limit

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8
Q

Rule 505 Regulation D

A

Raise no more then $5 million
unlimited accredited investors, only 35 unaccredited
If only accredited - do not have to provide audited financials
If includes non-accredited provide at least audited balance sheet

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9
Q

Rule 506 Regulation D

A

No limit on amount

unlimited accredited investors, only 35 unaccredited

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10
Q

Regulation A

A

can raise $50 million in 12 months and sold to anyone

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11
Q

Rule 147

A

Intrastate offering

must be organized and doing business in state where offering will be 80% proceeds test

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12
Q

What are exempt from registration under 1933 Act

A

governmental securities i.e. municipal bonds

charitable organizations

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13
Q

What is the idea of the JOBS act?

A

securities law that would make it easier for small companies to raise capital and create jobs

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14
Q

What did JOBS act create?

A
  1. Emerging growth companies - can have an IPO but avoids burdens of being a public company
  2. Encouraged crowdfunding
  3. Increased Regulation A amount from $5m to $50m
  4. Allow firms who do private placement to advertise
  5. public company definition changed so firms could grow before being called that
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15
Q

Requirements to be an EGC

A
  1. less than $1 billion annual gross revenue
  2. publicly traded for less than 5 years
  3. public float of less than $700million
  4. not issued $1billion in non-convertible debt in prior 3 year period
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16
Q

Benefits of being EGC

A
  1. registration statement is confidential reviewed by SEC
  2. only need 2 years of audited f/s instead of 3
  3. do not need to comply with SOX 404(b) for internal controls
  4. Do not need to comply with new PCAOB rules
  5. reduced disclosure for executive compensation
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17
Q

What is the crowdfunding limit

A

100,000 per year in total

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18
Q

Section 11 of Liabilities Provision 1933 Act

A

remedies misleading statements and omissions contained in the registration statement

19
Q

What must a plaintiff prove to win under Section 11?

A
  1. Material misstatements in registration statement
  2. trace their shares to the RS
  3. suffered damages - don’t need to prove reliance or fraud
20
Q

Section 12(a)(1) what does it remedy?

A
  1. sale of unregistered securities
  2. failure to deliver prospectus
  3. use of inadequate prospectus
  4. offer before RS is filed
21
Q

Section 12(a)(2) what does it remedy?

A

false statements and omissions in oral or free writing

22
Q

What is Section 10(b) Rule 10b-5

A

intent to defraud - omission or fraudulent statements

23
Q

What is the 1934 Act?

A
  • punishes fraud in secondary markets
  • regulates the securities industry
  • created the sec
  • created periodic disclosure system for co. with 500 shareholders and $10m assets
24
Q

Under 1934 Act, in terms of statute of limitations, when must a plaintiff bring his lawsuit?

A

Within 2 years of when he/she should have discovered the fraud AND within 5 years of the fraud.

25
Q

Who penalizes someone who violates 1933 or 1934 act?

A

SEC brings civil charges

DOJ brings criminal charges

26
Q

What was created after the mortgage financial crisis, and what did it implement?

A

Dodd Frank Act

Created Financial Stability Oversight Council (FSOC)
and Consumer Financial Protection Bureau (CFBP)

allows for whistleblowing - receive 10-30% of monetary recoveries over $1million

increases transparency

27
Q

Title VII of 1964 Civil Rights Act says there can be no discrimination in employment based on what and who does it apply to?

A
  • Race
  • Color
  • Religion
  • Sex
  • National origin

employers having 15 or more empoyees

28
Q

What is the ADEA?

A

Age Discrimination in Employment Act

protects workers over 40 against discrimination and mandatory retirement

29
Q

Explain the ADA.

A

Americans with Disabilities Act

encourage companies to use talent of disabled
requires reasonable accommodations
protects disabled from being denied

30
Q

How long must a fully insured employee work and what benefits do they get under social security?

A

must accrue a minimum of 10 years for full coverage

  • survivor benefits for widower and child
  • disability benefits for worker and family
  • old age retirement benefits

financed through payroll
investment and pension income will not reduce benefit

31
Q

Who does Medicare cover?

A

workers and spouses 65 and older for portion of costs and hospitalization

financed through payroll

32
Q

What does and does not FICA apply to?

A

applies to: salary, commission, bonuses and fringe benefits

does NOT apply to: reimbursed expenses, interest

33
Q

What benefits are “currently insured” entitled to?

A
  • limited survivor
  • benefits for disabled workers and dependents
  • lump-sum death
34
Q

Who pays for FUTA Taxes and what are the eligibility requirements?

A

employer only - take a federal credit if pay state fund first

  • involuntarily terminated
  • available/looking for work
  • not receiving retirement or disability benefits
35
Q

What does Fair Labor Standards Act cover?

A
  • minimum wages
  • overtime standard
  • child labor restrictions
  • equal pay (for women)

some workers are included in minimum wage but exempt from OT i.e. professionals, accountants

36
Q

ERISA - what does it protect and offer

A

Employee Retirement Income Security Act

  • protects employee’s rights in existing pension plans
  • does not require but encourages employers to provide pension/welfare benefits to get tax benefits and prevent discrimination
  • does NOT apply to govt pensions
37
Q

Two types of pension plans

A

Defined Benefit Plans - guaranteed certain amount of monthly income for life
Defined Contribution Plan - employers promise to contribute to retirement account hoping to be invested in wisely

38
Q

What is COBRA?

A

Federal Consolidated Budget Reconciliation Act

provides health insurance after a worker loses job

covers for 18 months

39
Q

What is the COBRA coverage for someone who was disabled at the time of a qualifying event?

A

29 months

includes spouse

40
Q

FMLA

A

Family Medical Leave Act

Allowing up to 12 weeks of unpaid leave without losing job (birth, adoption, serious health condition)

must have worked at least 12 months and at least 1250 hours

applies to employers with over 50 employees

41
Q

Under OSHA, an employee has the right to:

A
  1. File requirement for inspection
  2. Refuse in good faith to work
  3. Not be retaliated for exercising rights
42
Q

An invention is patentable if:

A
  1. tangible application of new idea
  2. useful
  3. it is novel
  4. it is nonobvious - something that already exists gives you an idea
43
Q

Auditors under 1934 Act Private Securities Litigation Reform Act must complete the following

A
  1. Identify material related-party transactions
  2. Detect material illegal acts
  3. Evaluate the ability for the firm to continue as a going concern
44
Q

Constructive fraud

A
  1. misrepresentation of material fact
  2. reckless disregard for truth
  3. reasonable reliance by the injured party
  4. injury

REG (17 decks)

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