REG01 Flashcards
Who can give disciplinary action related to preparing a frivolous tax return?
State Accountancy Board, AICPA, IRS
Who can give disciplinary action if a CPA issued an unmodified opinion on financial statements that were not in accordance with GAAP?
State Accountancy Board, SEC, PCAOB, AICPA
Who can give disciplinary action if a CPA was convicted of preparing fraudulent income tax returns?
State Accountancy Board, SEC, PCAOB, AICPA, IRS
Who can give disciplinary action if a CPA represented taxpayers before the IRS and license as a CPA and firm’s license were revoked by the state accountancy board?
SEC, PCAOB, AICPA, IRS
Under the antifraud provisions of Section 10(b) of the Securities Exchange Act of 1934, a CPA may be liable if the CPA acted negligently or without good faith?
Without good faith. Acting in good faith indicates lack of scienter. Thus, a CPA who acted without good faith cannot assert the good faith defense.
Under Section 11 (1933 Act), What does the investor need to prove?
Prove only that (s)he suffered losses in a transaction involving the particular securities covered by the registration statement and that the registration statement contained a false statement or an omission of a material fact for which the CPAs were responsible.
When are the sales of securities exempt from registration?
Most transactions are exempt because they involve sales by persons other than issuers, underwriters, or dealers.
A controlling person, one who owns more than 10% of the company’s stock and who has the direct or indirect ability to control the company is not a basis for an exemption under the Securities Act of 1933.
What is a well-known seasoned issuer and can they make oral communications at any time if certain conditions are met?
Has filed for at least 1 year under the SEC of 1934 and has a market capitalization of at least $700 million.
In specified circumstances, a well-known seasoned issuer may make oral and written communications at any time.
What is a seasoned issuer?
Having filed for at least 1 year and a market capitalization of at least $75 million.
Is there a rule that provides an intrastate offering exemption to an issuer incorporated or organized in the state in which the offering is made?
Yes, Rule 147.
All offerees and purchasers must be residents of the state. AND derive 80% or more of its gross revenue from the state, have at least 80% of its assets located in the state, and use at least 80% of the proceeds from the issuance in the state.
Can any issuer communicate a free-writing prospectus at any time?
No, a well-known seasoned issuer may make oral and written communications at any time. Including a free-writing prospectus, a written offer that is not a statutory prospectus. Subject to certain limitations, any issuer may communicate a free-writing prospectus after the registration statement is filed.
If a person acquires 9% of any registered equity security do they have to file with the SEC?
Yes, part of its regulation of tender offers, the SEC Act of 1934 requires any person who has acquired more than 5% of any registered equity security to file reports with the issuer, the exchange on which the security is traded, and the SEC. The information reported includes the identity of the purchaser, the source of funding, the purpose of the acquisition, and the number of shares owned.
Which issuers are eligible for shelf registration under SEC Rule 415?
Seasoned and well-known seasoned issuers. However, issuers are required to update the registration stmt frequently to keep it accurate and current.
The federal accountant-client privilege does not apply to what four matters?
Does not apply to criminal tax matters, private civil matters, disclosures to other federal regulatory bodies, or state and local tax matters.
What is a tier 1 offering under Regulation A (exemption from registration of securities)?
Tier 1 offering (maximum $20 million), the # and nature of investors is unlimited. No ongoing reporting requirements apply, but all issuers under Tier 1 (and Tier 2) must fill FS for the last 2 complete fiscal years.
