Federal Securities & Law Flashcards
Which of the following is least likely to be considered a security under the Securities Act of 1933?
General partnership interests.
The registration statement required for all non-exempt securities must contain
a description of the security, how the corporation will use the proceeds from the sale, a description of the registrant’s business and management, and a financial statement.
On what date may World first make oral offers to sell the shares?
As soon as a registration statement is filed, ORAL offers may be made, as well as limited written advertising. The 20-day waiting period that exists applies to when the securities may actually be SOLD. Unless the SEC speeds up the approval process, no sale can take place for 20 days after the filing.
The registration requirements of the Securities Act of 1933 are intended to provide information to the SEC to enable it to
Ensure that investors are provided with adequate information on which to base investment decisions.
A tombstone advertisement
Makes known the availability of a prospectus.
Pell is the principal and Astor is the agent in an agency coupled with an interest. In the absence of a contractual provision relating to the duration of the agency, who has the right to terminate the agency before the interest has expired?
Principal no, agent yes
An agency coupled with an interest arises when an agent acquires from the principal an interest in the subject matter of the agency. In the absence of a contractual provision relating to the term of the agency, the authority of the agent (Astor) is irrevocable by the principal (Pell). If there is no time period specified for the agency, then the agent (Astor) may terminate at any time without liability, regardless of the type of agency.
Unless an exemption applies to an offering of securities, the Securities Act of 1933 requires preparation and filing of a
Registration statement
Prospectus
Winslow, Inc. intends to make a $450,000 common stock offering under Rule 504 of Regulation D of the Securities Act of 1933. Winslow
May sell the stock to an unlimited number of investors.
Tweed Manufacturing, Inc. plans to issue $10 million of common stock to the public in interstate commerce after its registration statement with the SEC becomes effective. What, if anything, must Tweed do in respect to those states in which the securities are to be sold?
Make a filing in those states which have laws governing such offerings and obtain their approval.
Securities available under a private placement made pursuant to Regulation D of the Securities Act of 1933
Cannot be the subject of an immediate reoffering to the public.
Harris is a purchasing agent for Elkin, a sole proprietor. Harris has the express authority to place purchase orders with Elkin’s suppliers. Harris typically conducts business through the mail and has very little contact with Elkin. Elkin was incapacitated by a stroke and was declared incompetent in a judicial proceeding. Subsequently, Harris placed an order with Ajax, Inc. on behalf of Elkin. Neither Ajax nor Harris were aware of Elkin’s incapacity. With regard to the contract with Ajax, Elkin (or Elkin’s legal representative) will
Not be liable because Harris was without authority to enter into the contract.
Which of the following is(are) true of all three Rules 504, 505, and 506 of Regulation D under the Securities Act of 1933?
I. No general offerings or solicitation is permitted within a 12-month period.
II. The issuer must restrict the purchasers’ right to resell the securities.
III. The Securities Exchange Commission must be notified within 15 days of the first sale of the securities.
3 only
Ted buys Synchotic Corporation shares based on Synchotic’s announcement of record earnings. But just a few days later, on July 1, 2010, Synchotic admits that its earnings had been artificially inflated via fraudulent earnings management. Its stock price drops dramatically that day, and Ted makes a significant loss. Ted wishes to bring a 1934 Act securities-fraud lawsuit against Synchotic. In terms of the statute of limitations, when must Ted bring his lawsuit?
Within two years of when he should have discovered the fraud and within five years of the fraud.
The Federal Unemployment Tax Act (FUTA)
Allows the employer to take a credit against the FUTA tax if contributions are made to a state unemployment fund.
Deductible by the employer as a business expense for federal income-tax purposes.
An employer having an experience unemployment tax rate of 3.2% in a state having a standard unemployment tax rate of 5.4% may take a credit against a 6.2% federal unemployment tax rate of
5.4%
