REG Chapter 5

Question 1

Elements of Constructive Fraud

Answer 1

1. Misrepresentation of material fact
2. Acts with gross negligence or recklessly
3. Intent to induce plaintiff’s reliance
4. Actual and justifiable reliance by plaintiff
5. Damages

Question 2

“Common Law” Negligence (to sue)

Answer 2

1. Duty of care
2. Breach (which is lack of due care)
3. Causality
4. Injury

Question 3

Section 10(b) and Rule 10b-5

Answer 3

1. Plaintiff purchased or sold securities
2. Material misrepresentation
3. Scienter (intent to deceive / reckless disregard for the truth)
4. Damages incurred
5. A means of interstate commerce was involved

Question 4

MAIDS (fraud)

Answer 4

1. Misrepresentation of material fact
2. Actual and justifiable reliance
3. Induced the victim to rely on
4. Damages
5. Scienter (intentional or reckless disregard for the truth)

Question 5

Rule 147 under 1933 Act

Answer 5

Is an exception given in the case of intrastate issues that provides that for 9 months after the last sale by the issuer, resales can only be made to residents of the state.