Module 12 - Securities Regulation Flashcards
What is the Black-out Rule?
A director or principal officer of an issuer must not deal in the issuer’s securities during the period within which a material non-public information is obtained and up to 2 full trading days after disclosure of the price-sensitive information.
What is the period within which a listed issuer must file a current report or SEC Form 17-C?
10 minutes from occurrence of the event and prior to its release to the public through the news media
What are the modes of listing on the PSE?
a. Initial Public Offering
b. Backdoor Listing
c. Listing by way of introduction
d. All of the above
e. None of the above
All of the above
What power(s) does the Philippine Stock Exchange have as a self-regulatory organization?
a. Approve the registration of salesmen and associated persons
b. Decide intra-corporate controversies
c. Enforce compliance with its own rules
d. All of the above
e. None of the above
Enforce compliance with its own rules
Which of the following statements best describes the underlying principle behind the “Broker-Director Rule”?
a. The rule seeks to prevent the practice of having interlocking directors or officers between broker dealers and listed companies.
b. To encourage transparency in the stock market, transactions of broker dealers involving the securities of an affiliated listed firm may be exempted from the application of the rule provided the affiliated listed company makes a pre-trade disclosure on its interlocking directors or officers.
c. The rule seeks to prevent the buying and selling of shares on the back of inside information about a listed company.
d. Under the rule, broker dealers are not allowed to engage in any buy or sell transactions involving shares of stocks issued by listed firms where any of the broker dealer’s employees is at the same time holding office in the listed company.
e. None of the above.
The rule seeks to prevent the buying and selling of shares on the back of inside information about a listed company.
Which of the statements below best describes the manipulative practice called “Improper Matched Orders”?
a. Broker dealers engage in buy and sell transactions in which there is no genuine change in actual ownership of the security.
b. Broker dealers engage in buy and sell transactions at the close of the market to change the closing price of the security.
c. Broker dealers engage in excessive trading transactions in a customer’s account for the purpose of generating commissions.
d. Colluding broker dealers engage in transactions where both the buy and sell orders are entered at the same time with the same price and volume.
e. None of the above.
Colluding broker dealers engage in transactions where both the buy and sell orders are entered at the same time with the same price and volume.
Who among the employees of a broker dealer are required to be registered with the Securities and Exchange Commission?
a. The Associated Persons, Salesmen and Trainees.
b. The Associated Persons, Salesmen and Authorized Clerks and Agent.
c. The Associated Persons and Salesmen.
d. The Associated Person, Salesmen, Authorized Clerks and Trainees.
e. None of the above.
The Associated Persons and Salesmen.
Which of the following statements is NOT true on the broker dealer’s obligation to furnish a customer a statement of account?
a. A broker dealer is required to send a statement of account to each customer with a frequency of not less than twice a month.
b. Upon the written request of a customer, the broker dealer may issue quarterly statement of accounts.
c. a Broker Dealer may opt to use a statement of account in electronic format, unless client requests paper format.
d. A broker dealer is excused from sending statement of account if, after at least three (3) attempts, the mails are returned by the post office for failure to locate the whereabouts of the customer.
e. All of the above.
f. None of the above.
A broker dealer is required to send a statement of account to each customer with a frequency of not less than twice a month.
Which among the following is/are the declared objective/s of the State in enacting the Securities Regulation Code?
a. Investor protection
b. Promotion of capital market development
c. Attainment of the country’s economic targets
d. A and B only
e. All of the above
A and B only
Mr. Santos is a director of ABC Corporation. During the regular meeting of the Board of Directors of ABC Corporation where Mr. Santos was present, the Board resolved to approve the merger of ABC Corporation with XYZ Corporation. Simultaneous with the disclosure of the said information to the public, Mr. Santos’ wife, Mrs. Santos, sold all of her shares in ABC Corporation. The SEC initiated an investigation against Mrs. Santos for violation of the rule on insider trading. Mrs. Santos argued that she may not be prosecuted for illegal insider trading because she is not a corporate insider and, in any case, she disposed of her shares only when the approval of the merger had become public. Is her argument tenable?
a. Yes, because only corporate insiders like directors and officers of a corporation may be prosecuted for unlawful insider trading.
b. Yes, because the information was already available to the public when she sold her shares in ABC Corporation.
c. No. The disposition of her shares in ABC Corporation is presumed to have been made while in possession of material non-public information because she is the spouse of an insider and when she sold her shares, a reasonable time has not yet lapsed for the market to absorb the disclosure.
d. No. The spouse and relatives of an insider within the second degree of consanguinity or affinity are included in the definition of insiders under the Securities Regulation Code.
No. The disposition of her shares in ABC Corporation is presumed to have been made while in possession of material non-public information because she is the spouse of an insider and when she sold her shares, a reasonable time has not yet lapsed for the market to absorb the disclosure.
