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REG > R5pt5-Fed.Sec.Acts > Flashcards

R5pt5-Fed.Sec.Acts Flashcards

1
Q

What are the key points of the 1933 Securities Act?

A
  • Regulates original issuance of Sec.
  • Governs Initial Public Offerings (not subsequent sales).
  • Covers registration statements and accompanying information filed with SEC.
  • Information must include audited financial statements & 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

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2
Q

What entities are exempt from filing registration statements under the 1933 Securities Act?

A

Banks; Commercial Paper (within 9 months); Farmers; Co-ops; Charities; Governments, Railroads, insurance policy

  • Securities sold in ONE state; where investors are residents; 80% of business done in one state.
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3
Q

What are the key points of the 1933 Securities Act; Regulation A?

A
  • Sales may not Exceed $5 million in a 12-month period
  • Files Offering Statement
  • Simplified form Non-issuers (AKA a private individual) can sell $1.5M per year and be exempt
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4
Q

Under the 1933 Securities Act; Regulation D; what is Rule 504?

A
  • Max Amount per year: $1M;
  • Max Investors: Unlimited
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5
Q

What are the registration form options under the 1933 Securities Act?

A

S-1 - Long Form or S-2 and S-3

  • Less Detailed and preferred by issuers
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6
Q

Name the securities registered under the Securities Act of 1933.

A

Stocks, Stock Options, Stock Warrants, Limited Partnership Interests, Bonds

  • General Partnerships not allowed
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7
Q

Who can sue under the Securities Act of 1933?

A

Purchasers of securities only

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8
Q

Name the Requirements for Accountant to be liable under the Securities Act of 1933.

A

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
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9
Q

Name the Defenses of an Accountant under the Securities Act of 1933.

A
  • Accountant used Due Diligence Accountant followed GAAP
  • Damages weren’t caused by accountant’s work
  • Plaintiff knew of the material misstatements
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10
Q

What does the Securities Act of 1934 govern?

A

The trading/selling of securities after the IPO

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11
Q

What reports must be filed under the Securities Act of 1934?

A
  • Form 10-K Annual Report
  • Form 10-Q Quarterly Report
  • Form 8-K
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12
Q

Who can sue under the Securities Act of 1934?

A

Purchases and Sellers of Securities

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13
Q

Name the Requirements for an Accountant to be liable for fraud under the Securities Act of 1934.

A
  • Damages
  • Material Misstatements
  • Reliance on financial statements
  • Scienter or reckless disregard for the truth
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14
Q

What procedures must an Accountant have in place under the Securities Act of 1934?

A

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 occurred
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15
Q

Insider trading rules under the Securities Act of 1934 apply to which individuals?

A

Officers; Directors and 10% Owners

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16
Q

What are the Proxy Solicitation Requirements under the Securities Act of 1934?

A
  • Proxy must give shareholders audited balance sheets from 2 most recent years
  • Requirement holds true even if one class of stock
17
Q

When a CPA signs off on F/S & can be held Liable when the Plaintiff:

A

Section 11 of 1933 Act:

  • Acquires the stock
  • Suffered a Loss
  • F/S contained Misrepresentation
18
Q

What are Securities & Investment Contracts?

A
  • Stocks- Bonds - Oil Well- Warrants- Limited Partnership
19
Q

What are NOT Securities & Investment Contracts?

A
  • CDs
  • General Partnership interests
20
Q

What is the GOAL of the Sec. Act of 1933?

A
  • Assure that investors have sufficient information on which to make an informed investment decision
21
Q

How does the Sec. Act of 1933 accomplish its Goal?

A
  • Requiring Most issuers to register new issues of securities with SEC

&

  • Provide Prospectuses containing material information regarding the securities to prospective investors
22
Q

What is the Prospectus?

A
  • A written/radio/tv offer to sell securities
23
Q

What is a Shelf Registration?

A
  • Prepare one registration statement for all securities that they will offer in the future
24
Q

What are the General Conditions for Reg. D that apply to Rules: 504,505,506?

A
  • No Advertising
  • Immediate Resale of Public Prohibited
  • SEC must be informed within 15 days after the 1st Sale
25
Q

Under the 1933 Securities Act; Regulation D; what are Rule 505?

A
  • Max Amount per year: $5M
  • Max Investors: 35 Unaccredited OR

Unlimited Accredited:

  • At Least $1Mil net worth or $200k annual income
26
Q

Under the 1933 Securities Act; Regulation D; what is Rule 506?

A
  • Max Amount per year: Unlimited $
  • Same as 505

~ But Unaccredited investors must be sophisticated

27
Q

Disclosure requirements for 1933 Sec. Act for Rule 505:

A

If only Accredited Investors:

  • No disclosure is req. If one Unaccredited investor then:

~All investors must be given at least an annual report with audited F/S.

28
Q

What are the two types of companies must register their securities?

A
  • Whose shares are traded on a National Exchange

OR

  • More then $10Million in Assets & at least 2,000 shareholders

OR

  • 500 shareholders who are not accredited
29
Q

What is the filing requirement for Form 10-K?

A
  • Annual Report
  • Must be audited
  • Filed within 60 days for Large Corps
  • 90 days For Small Corps.
30
Q

What is the filing requirement for Form 10-Q?

A
  • Quarterly Report
  • Must be reviewed; but not audited
  • Filed within 40 days for Large Bus.
  • Filed within 45 days for Small Bus.
31
Q

What is the filing requirement for Form 8-K?

A
  • A notice of a material event
  • Must be filed within 4 days of event
32
Q
A
33
Q

Under Regulation D of the Sect. Act of 1933, Who can a Retricted Security holder Resell to?

A
  • As Part of another Transaction exempt from Registration

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