Federal Securities Acts 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, and 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 $50M 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 is Rule 504?
Sell up to a max amount per year of $1M,
Max Investors: Unlimited
Not required to registered with SEC
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.
Damages
Material Misstatements Only
Reliance on financial statements are not a requirement unless purchased more than a year after the security is registered
Proving negligence is not a requirement
Name the Defenses of an Accountant under the Securities Act of 1933.
Accountant used Due Diligence
Accountant followed GAAP
Damages weren’t caused by accountant’s work
Plaintiff knew of the material misstatements
Who does the Securities Act of 1934 govern?
The trading/selling of securities after the IPO
Shares listed on National Stock Exchange
>500 shareholders
Assets >$10 million
What reports must be filed under the Securities Act of 1934?
Form 10-K Annual Report - Must be audited
Form 10-Q Quarterly Report - Must be reviewed; but not audited
Form 8-K - A notice of a material event; Must be filed within 4 days of event
What is a Insider trading under the Securities Act of 1934?
Owners 10%, Directors, CEO
- Access to material, nonpublic info
- Not disclose before trading
- Fiduciary duty to issuer, shareholder
What are the Proxy Solicitation Requirements under the Securities Act of 1934?
Proxy must give shareholders audited balance sheets from 2 most recent years
Requirement holds true even if one class of stock
Under the 1933 Securities Act - Regulation D, what is Rule 505?
Max Amount sell per year: $5M,
Max Investors: 35 Unaccredited or Unlimited Accredited
Restricted security, not for immediate resale, no advertising
No registration is required.
Under the 1933 Securities Act - Regulation D, what is Rule 506?
Max Amount per year: Unlimited,
Same as 505, but Unaccredited investors must be sophisticated
Restricted security, not for immediate resale, no advertising
No registration is required
