Federal Securities Acts Flashcards
1933 Securities act
Governs IPOs
gives investors adequate info for investment decisions and assurance that fs & disclosures can be relied upon
Gives recourse against accountants
Who can sue under 1933 act
Purchasers of securities only
requirements for accountant to be liable under 1933 act
damages and material misstatements only
reliance on fs are NOT a requirement unless purchased more than a year after security registered
proving negligence is NOT a requirement
defenses accountant can use under 1933
used due diligence
followed GAAP
damages weren’t caused by accounts work
plaintiff knew of material misstatements
Registration statements under 1933 act
Must be filed with and accepted by the SEC
must include audited financial statements and prospectus
Exempt from filing registration statement under 1933
banks commercial paper farmers coops sold by charities sold by govts sold in one state only
registered securities under 1933
stocks stock options stock warrants limited partnership interest bonds
Reg D 1933 - Rule 504
$1M/yr max
Unlimited investors
Reg D 1933 - Rule 505
$5M/yr max
35 unaccredited investors
Unlimited accredited investors
Reg D 1933 - Rule 506
Unlimited $$
35 unaccredited investors
Unlimited accredited investors
1934 Securities act
Governs trading and selling after IPO
Registrants of 1934 act
Must file:
Form 10-K annual report ( audited)
Form 10-Q Qtrly report (reviewed but not audited)
Form 8-K (notice of material event - filed w/in 4 days of event)
who can sue under 1934 act
Purchasers and Sellers
Requirements for accountants to be liable under 1934
damages
material misstatements
RELIANCE on fs
Scienter
1934 act accountant must have procedures in place to:
Determine if Going Concern is an issue
Determine if any material related party transactions occurred
determine if material illegal acts occured
