Federal Securities Laws

Question 1

Section 16(b)

Answer 1

A short swing trading profit received with a 6 month period by a corporate insider must be disgorged to any corporation that is:
1. listed on the national exchange OR
2. $10 million in assets and at least 20000 SHs or 500 accredited investors

Question 2

Corporate Insider

Answer 2

All Directors, Officers, and Shareholders with more than 10% share at both time of purchase and sale

Question 3

Section 10b-5

Answer 3

Disallows insider trading and provides liability for any person who employs fraud or deception in connection with the purchase or sale of any security by means of instrumentality of interestate commerce

Question 4

Section 10b-5

Answer 4

Disallows insider trading and provides liability for any person who employs fraud or deception in connection with the purchase or sale of any security by means of instrumentality of interestate commerce

Question 5

Prima Facie Case for Insider Trading

Answer 5

1. Intent to Defraud, Deceive, or Manipulate
2. Material Misrepresentation or Omission
3. Reliance
4. Purchase or Sale
5. Interstate Commerce

Question 6

Material Misrepresentation or Omission

Answer 6

Substantial likelihood that a reaosnable investor would consider it important in making an investment deision

Question 7

Tippee liability if:

Answer 7

1. Tipper Breached a fiduciary duty to Corp.
2. Tippee knew tipper breached duty
3. Tippee Benefited

Question 8

Sarbanes Oxley Act

Answer 8

Requires publicly held companies to establish an audit committee of board members which oversees work performed by accounting form and estabiishes internal procedures for handling complaints about company’s auditing

-CEO/CFO or similar person must certify in each report that officer has reviewed the report, that the report is true to officer’s knowledge, and that the officer is responsible for the internal controls

-Breach requires officer to reimburse any bonus received during the 12 month period after inaccurate report was filed