REG mod 24b Flashcards
What is the general purpose of the Securities Act of 1933?
The purpose is to provide disclosure of information that is complete and fair to the potential investors. The Act of 1933 relates to the offering of securities.
What is the 10-Q?
The form used for quarterly reports that must be filed with the SEC. The financial statements are not required to be audited. They are required to be reviewed.
Does the SEC prosecute fraudulent cases?
No, the SEC refers the case to the Department of Justice.
Does the Sarbanes-Oxley Act apply to the auditors of privately held entities?
No, it applies to auditors of SEC registrants
The SEC’s insider trading rules apply to _____, ______, and _______.
Directors, Officers, and owners of 10% or more of the entity’s stock.
When may an entity begin selling securities? When may an entity begin offering securities for sale?
An entity cannot sell the securities until the effective date of the registration statement; however an entity may begin making oral offers of the securities for sale after filing the registration statement.
Describe Rule 10(b) 5 under the Securities Exchange Act of 1934.
Rule 10(b)5 is the anti-fraud section of the Securities Exchange Act of 1934. This section makes it illegal to use deception in the purchase or sale of securities.
What is a 10-K?
This is an annual report filed with the SEC. It is required to contain audited financial statements.
What is an 8-K?
Disclosure of material events
When is form 8-K due?
Within the four business days following the date on which the material event occurred
Describe Rule 504 of Regulation D in the Securities Act of 1933.
Rule 504 provides an exemption from filing with the SEC for issuances of stock in an amount up to $1,000,000 over a 12 month period. Note: the investors must be accredited (high net worth individuals). No financial information is required to be given to the investors under Rule 504. There is an unlimited number of investors permitted under Rule 504.
Who has the burden of proof in a lawsuit brought under the Securities Act of 1934?
The plaintiff
Describe Rule 505 of Regulation D in the Securities Act of 1933.
Exemption from filing w/SEC for issuances of stock up to $5,000,000 over a 12 month period. Any number of accredited investors may purchase the securities, but the number of non-accredited investors is limited to 35. Resale of the securities is generally not permitted for a min of 2 yrs. If just one non-accredited investor purchases the securities, an audited balance sheet must be provided to all investors.
Name the act that makes it illegal to destroy records in order to impede investigations.
The Sarbanes-Oxley Act
Describe Regulation S-B.
Regulation S-B applies to small businesses (less than $25 Million of revenue). The regulation allows for a reduction in the reporting requirements.
