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Gleim > SU 2 Law > Flashcards

SU 2 Law Flashcards

1
Q

Purpose of ‘33

A

regulate IPO

require filing of registration statement w/ SEC before sale/offer to sell

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2
Q

Objectives of ‘33

A

disclosure to potential investors wrt all material info

prevent fraud

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3
Q

Issuer

A

individual or business org initially offering security for sale to public
includes controlling person (owns > 10% of stock)

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4
Q

underwriter

A

participates in original offering w/ intent to distribute

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5
Q

dealer

A

engaged in business of offering, selling, buying, dealing, trading securities issued by another
can be a broker- executes securities transactions for others

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6
Q

Nonreporting issuer

A

doesn’t have to file report under ‘34

uses Form S-1

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7
Q

Unseasoned issuer

A

reported for at least 3 consecutive years under ‘34
Form S-1
can refer to other ‘34 act reports

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8
Q

Seasoned issuer

A

filed for at least 1 year
mkt cap = at least 75M
Form S-3

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9
Q

Well Known Seasoned Issuer

A

filed for at least 1 year
worldwide mkt cap = at least 700M or issued 1B debt/preferred stock in last 3 years
Form S-3

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10
Q

Emerging Growth Co

A

issuer w/ annual gross rev 1B

  • 5 years after IPO
  • issued 1B in nonconvertible debt
  • large accelerated filer (700M in public stock)
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11
Q

issuer must file

A

registration statement

prospectus

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12
Q

registration statement

A

effective on 20th day after filing
complete disclosure to SEC of all material info
includes prospectus
describes
-business, property, competition
-provisions of security to be offered for sale
-mgt, compensation of directors/officers, holdings of securities, material transaction w/ these indiv
material legal proceedings
principal purpose proceeds used
MD&A
signature of issuer, CEO, CFO, chief accounting officer, majority of directors
if public accountant has changed w/in last 2 fiscal years

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13
Q

prospectus

A

must give to any interested investor
purpose-supply facts to make informed decision
access= delivery

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14
Q

Regulation S-X

A

states form/content of for f/s filed under ‘33

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15
Q

Shelf registration under ‘33

A

after registration statement filed, put on shelf for max 3 years until best time for offering found
only for seasoned issuer & WKSI

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16
Q

Exempt Securities under ‘33

A 
domestic govt
NFP
Bank
S&L
federally regulated common carriers
receiver/trustee in bankruptcy w/ prior court approval
state-regulated insurers
corp in reorg
stock div/stock split
commercial paper to buy working cap if
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17
Q

Intrastate offerings

Rule 147

A

80% proceeds used in state
80% assets located in state
issuer does 80% business (gross rev) in state
all purchasers & offerees are residents of state
can’t sell to nonresident for at least 9 months after initial sale complete

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18
Q

Regulation A

A

max 5M in 12 months
unlimited investors
unrestricted resale
less detailed, time consuming, cheaper than full registration
offering statement w/ notification & offering circular filed to SEC (20 day waiting pd)
sell after SEC approved filing
broadcast/written ads (no oral comm)

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19
Q

Reg D

Rule 504

A

max 1M in 12 month
unlimited investors
general solicitation allowed if follows state law
resale unrestricted

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20
Q

Reg D

Rule 505

A

max 5M in 12 month
max 35 unaccredited investors
no general solicitation/ads
restricted resale

21
Q

Reg D

Rule 506

A

No max $
max 35 unaccredited
no general solicitation/ads unless sales to accredited investors
restricted resale

22
Q

Rule 4(6)

A 
max 5M
unlimited accredited investors
no unaccredited
no gen solicitation/ads
restricted resale
23
Q

Crowdfunding

A

max 1M
unlimited investors
restricted resale
investment limited based on income, net worth

24
Q

main elements of ‘34

A

create SEC
periodic reporting
antifraud
insider liability for short swing

25
Q

OTC issuer can terminate registration if

A
26
Q

‘34 Registration discloses

A 
corp org
financial structure
describe securities
names of officers, directors, underwriter, holders > 10% equity
describe nature of business
financial statement
describe bonus & profit-sharing
27
Q

Annual reporting requirements

A

file w/in 60 days for large accelerated filers (at least 700M in public shares)
75 days for accelerated filers (75M-700M)
90 days for nonaccelerated filers (

28
Q

10K contains

A 
business activities
securities
stock price
mgt related ppl
disagreements about accounting & disclosure
audited f/s
29
Q

10Q

A

40 days after end of 1st 3 fiscal quarters for large accelerated filiers
45 days by nonaccelerated

30
Q 
Section 14(a)
Proxy Solicitation
A

illegal to solicit proxy wrt registered security

10 days before mail proxy statement to sh co must file copy w/ SEC

31
Q

Tender offer

A

invitation to sh of another corp to tender shares for specific price
ppl must file statement w/in 10 days (post acquisition tender) w/ SEC, issuer, securities exchange
-acquire > 5% of registered securities
-make tender offer for > 5% of securities
-issuer offer to buy its registered sec
-target of hostile tender offer

32
Q

Insiders under ‘34

Section 16

A

directors
officers
own > 10% stock listed on national exchange
report on form 3 (initial), form 4 (changes), form 5 (annual)
-ownership w/in 10 days of becoming insider
-statement @ end of 2nd business day engaged in transaction w/ co.’s equity securities
-annual statement w/in 4 days after end of FY
16(a) failure to comply w/ SEC reporting rules
plaintiffs-govt admin

33
Q

Penalties for certifying statements per of SOX

A

unknowing- 1M, 10 yrs jail

knowing- 5M, 20 yrs jail

34
Q 
Short Swing
Section 16(b)
A

short swing-profits from sale & purchase (vice/versa) of stock w/in 6 mo pd.

plaintiff-issuer or sh suit if issuer doesn’t sue w/in 60 days after request
strict liability
insider doesn’t have to have material nonpublic info

35
Q

Section 11 of ‘33

A

prohibits misstatement/omission in registration statement or prospectus
plaintiff-investors
defendants-everyone
liability- strict (issuer), negligence for others

36
Q

Section 12(a)(1) of ‘33

A 
no registration
no deliver of current prospectus
sale before registration
plaintiff- purchaser
defendant- seller
liability-strict
37
Q

Section 12(a)(2) of ‘33

A

material misstatement/omission about offer or sale of security
plaintiff-purchaser
defendant- seller
liability- negligence

38
Q

Section 17(a) of ‘33

A

fraud, material misrepresentation, omission in sale
plaintiff-SEC (no private remedy)
defendant-offeror/seller
liability-civil or criminal

39
Q

Section 18(a) of ‘34

A 
mislead statement
omission in any SEC filing
plaintiff-purchaser/sellers who rely & incur loss
defendant- filers
defense-good faith, no knowledge
40
Q

Section 14(a) of ‘34

A

misleading proxy
plaintiff- govt, sh
defendant- parties soliciting

41
Q

Section 14(e) of ‘34

A

material misstatement/omission of fact/fraud wrt tender offer
plaintiff- govt, private suit by target or sh
defendant- tender offeror

42
Q

Rule 10b-5 of ‘34

A

fraud wrt purchase/sale
plaintiff-govt, purchaser, seller
defendant-any person who commits fraud (prove scienter)

43
Q

Section 20 of ‘34

A

insider trading
plaintiff- govt, contemporaneous purchaser/seller
defendant- insider w/ MNPI

44
Q

Criminal liability of ‘34 for willfully & knowingly making materially false statement

A

indiv-max fine=5M or 20 years jail
corp-max fine=25M
reckless disregard = willful violation
compliance w/ pro stds isn’t absolute defense

45
Q

404 of SOX- internal control

A

establish & document internal ctrl (annual report)

mkt cap

46
Q

Dodd-Frank

A

auditors of broker-dealers are subject to inspection by PCAOB
-broker-dealers must be audited
Financial Stability Oversight Council
Investment advisors w/ 25-100M of assets must register w/ state regulators
-registered w/ at least 15 states must register w/ SEC
sh has right to nonbinding vote on compensation for corp officers 1x per 3 years

47
Q

Liability to 3rd parties for fraud

A

reasonably foreseeable users of product
-should see would be injured by reliance
privity not needed
foreseeable user can sue

48
Q

Contributory vs comparative negligence

A

contributory-plaintiff responsible for own injuries doesn’t get damages
-not applicable in most states
comparative-plaintiff responsible for own injuries may recover % damages caused by defendant
partial comparative negligence-if plaintiff> 50-51% fault, can’t recovery damages

Gleim (7 decks)

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