Federal Sec Flashcards
What are the key points of the 1933 Securities Act?
Governs Initial Public Offerings (not subsequent sales). Covers registration statements and accompanying information filed with SEC Information must include audited financial statements & a prospectus Note: Even if a company is exempt from registering under the 1934 Act; they still must adhere to the anti-fraud provisions of the Act
What entities are exempt from filing registration statements under the 1933 Securities Act?
Banks; Commercial Paper; Farmers; Co-ops; Charities; Governments Also exempt: Securities sold in ONE state; where investors are residents; 80% of business done in one state; and resales can’t occur within 9 months to interstate parties.
What are the key points of the 1933 Securities Act; Regulation A?
Issuer can issue $5M of securities per year and be exempt if they file a notice with the SEC Non-issuers (AKA a private individual) can sell $1.5M per year and be exempt
Under the 1933 Securities Act; Regulation D; what are Rules 504; 505 and 506?
Rule 504- Max Amount per year: $1M; Max Investors: Unlimited Rule 505 - Max Amount per year: $5M; Max Investors: 35 Unaccredited or Unlimited Accredited Rule 506 - Max Amount per year: Unlimited; Same as 505; but Unaccredited investors must be “sophisticated”
What are the registration form options under the 1933 Securities Act?
S-1 – Long Form or S-2 and S-3 – Less Detailed and preferred by issuers
Name the securities registered under the Securities Act of 1933.
Stocks Stock Options Stock Warrants Limited Partnership Interests - General Partnerships not allowed Bonds
Who can sue under the Securities Act of 1933?
Purchasers of securities only
Name the Requirements for Accountant to be liable under the Securities Act of 1933.
o Damages & Material Misstatements Only o Reliance on financial statements are not a requirement unless purchased more than a year after the security is registered o Proving negligence is not a requirement
Name the Defenses of an Accountant under the Securities Act of 1933.
o Accountant used Due Diligence o Accountant followed GAAP o Damages weren’t caused by accountant’s work o Plaintiff knew of the material misstatements
What does the Securities Act of 1934 govern?
The trading/selling of securities after the IPO
What reports must be filed under the Securities Act of 1934?
o Form 10-K Annual Report - Must be audited o Form 10-Q Quarterly Report - Must be reviewed; but not audited o Form 8-K - A notice of a material event; Must be filed within 4 days of event
Who can sue under the Securities Act of 1934?
Purchases and Sellers of Securities
Name the Requirements for an Accountant to be liable for fraud under the Securities Act of 1934.
Damages Material Misstatements Reliance on financial statements Scienter or reckless disregard for the truth
What procedures must an Accountant have in place under the Securities Act of 1934?
Accountant must have procedures in place to: o Determine if Going Concern is an issue o Determine if any material related party transactions occurred o Determine if material illegal acts occurred
Insider trading rules under the Securities Act of 1934 apply to which individuals?
Officers; Directors and 10% Owners
