Unit 7 Flashcards
The FTC’s principal missions are to keep the US economy ……..
both free and fair 1305
_____ of the FTC Act empowers the commission to to prevent unfair methods of competition and unfair or deceptive acts or practices
Section 5; 1305
List the 3 important FTC enforcement devices:
- procedures for facilitating voluntary compliance
- issuance of trade regulation rules
- adjudicative proceedings 1306
A prime example of voluntary compliance enforced by the FTC are the issuance of _________. These are not _____, however they are often followed.
Industry Guides 1306
An FTC adjudicative proceeding is headed by an FTC _________. Decisions from this proceeding can be appealed to the ______, and then the _______, and finally the _______.
administrative law judge, FTC’s 5 commissioners, federal court of appeals, U.S. Supreme Court 1306
The usual penalty resulting from a final decision against the respondent in an adjudicative proceeding is an _________.
cease-and-desist order 1306
This orders the respondent to stop their illegal behavior
The civil penalty for noncompliance with a cease-and-desist order is up to ________.
$16,000 per violation 1307
a _________ is an alternative to adjudication. It is an order approving a negotiated agreement in which the responded promises to cease certain activities.
Consent order 1306
to be deceptive, the representation, omission, or practice must also be likely to ___________.
Miss lead reasonable consumers under the circumstances 1309
The TSR ACT governs….
telemarketer behaviors ensuring they disclose required information, call the consumer only during the hours of 8am to 9pm (time based on the consumer’s location), and ensure they are not harassing. 1314
The _________ Act requires warrantied products valued more than _____ to be in writing.
Magnuson-Moss, $15 1319
The Truth in Lending Act (TILA) generally applies to creditors who extend credit to a debtor on a regular basis, not exceeding _______. Consumers seeking protection under TILA must be a _______ and the act does not protect _______ .
$53,000, natural person, business organization 1319
The TLA provisions are broken down into 3 main categories:
- open-end credit
- closed-end credit
- credit card applications and solicitations 1320
Under the TILA a credit card holder liability for unauthorized use of the card is limited to _____.
$50; 1320
The ___________ was enacted to give people protection against abuses in the process of disseminating information about their credit worthiness.
Fair Credit Reporting Act (FCRA) 1320
Under the FCRA, users of credit reports (such as employers) that order an __________ must provide the consumer a copy if the report is to to be relied on in a decision and inform the consumer _____________.
Investigative consumer report, if the reliance led to an adverse action 1321
Another name for a credit bureau is ________.
consumer reporting agency 1321
The general duty that auditors, consultants, and securities professionals owe to their clients and to other persons who are affected by their actions is to exercise the _____ and _____ of the ordinarily prudent professional in the same circumstances.
skill, care 1235
When clients sue professionals, there are three principal bases of liability:
- contract
- tort
- trust (the professional must maintain the clients confidentiality) 1235
When an accountant negligently fails to discover embezzlement, generally he is liable to his client only for an equal amount to the embezzlement that occurred…..
…. After he should have discovered the embezzlement 1237
The accountant is usually not liable for any part of the embezzlement that occurred…
…Prior to the time he should have uncovered the embezzlement. 1237
a person acts with _____ when he knows of the falsity of a statement or he recklessly disregards the truth. Thus, accountants are liable in ______ for their intentional or reckless disregard for accuracy in their work.
scienter, fraud 1239
Usually, a client may receive only _______ damages for a breach of contract for negligence. By proving fraud, a client may be awarded ________ damages as well.
compensatory, punitive 1240
Under the doctrine of __________, course refuse to intervene in a dispute between litigants when both have engaged in wrongdoing.
in pari delicto 1240
Under the __________ exceptions, outside auditors or other professionals ______ use the in pari delicto defense when they share some blame for the corporate insiders fraud if the corporation has innocent parties such as shareholders. In sum, the shareholders should not be prevented from collecting damages.
adverse interest, can not 1240
In New York, for in pari delicto not to apply, the client’s agent must have totally abandoned the ______ interests and be acting entirely for ____ or _____,
client’s, his own, another’s interests 1241
While an auditor or investment banker may be able to assert in pari delicto as a defense in an action by the _____ against the ________, the defense will not exist when on their own behalf ___________ sue an auditor or investment banker for causing direct harm to the ______.
client, auditor or investment banker, innocent shareholders of the client, shareholders 1241
Purchasers who buy the client’s securities based on false statements in a document prepared for investors by an investment banker may sue the ________.
Investment banker 1242
Many courts have restricted the ability of non-clients to sue a professional for damages _______ caused by the professional’s negligent conduct. These courts limit nonclient suits on the grounds that nonclient users of the professionals work product have not contracted with a professional and therefore, are not in _________ with her.
proximate, privity of contract 1242
The _________ requirement protects an ______ or other professional who does not know the user or the extent of use of its work product and, therefore, is unable to assess the potential dollar amount of liability or the user’s propensity to sue. There; however, now 3 tests courts use to determine whether a nonclient may sue a professional for negligence:
Ultremares privity, auditor
- Primary benefit test
- Foreseen users & foreseen class of users test
- foreseeable users test 1242
under the primary benefit test, the non-client must be a _______ of the professional’s work product. The professional must know _____ and the client must have a _____ intent that user use the work product.
foreseen, name of the user, primary 1243
Under the concept of the Foreseen users & foreseen class of users test; if the accountant negligently prepared the client’s income statement for the purpose filing a tax return, but instead the client obtained a loan, the accountant ______ be liable to the nonclient bank.
would not 1243
Few courts have extended liability of an accountant’s audit or other report under the foreseeable users test for those nonclient’s who suffered damages that were ________ by the accountant’s negligence.
proximately caused 1244
Fraud is such reprehensible conduct that __________ is not required when a person suffered damages that were ________ caused by professional fraud. To prove fraud, a nonclient must establish that a professional acted with _______.
privity of contract, proximately, scienter 1247
The slow reaction of the common law and creating a negligence remedy for third parties has led to increased use of ________ by nonclients–that is persons not in privity with a professional.
securities law 1247
Under Section ____ of the Securities Act, auditors or underwriters are liable to any purchaser of the securities issued pursuant to a defective registration statement.
11; 1248
Under Section 11, auditors in underwriters may escape liability by proving that they exercised _________. This is usually proved by establishing they complied with ______ and ______ and were essentially not negligent.
due diligence (the due diligence defense), GAAS, GAAP 1248
Underwriters are considered ____ whereas auditors are _____.
experts, not 1248
Section ________ imposes liability on any person who missed states or omits a material fact in connection with an ______ or ______ of a security that is part of a general distribution of securities by an issuer. Privity _____ required.
12(a)(2), offer, sale, is 1248
Under 12(a)(2) the defendant must:
1-
2-
- must actively solicit the sale; and
2. be motivated by ability to receive direct commission/profit from the sale 1249
Under Section _____, a purchaser of a security must prove his reliance on a misstatement or omission of ________ for which an accountant or securities professional is responsible.
17(a), material fact 1249
Section _____ imposes liability on persons who furnish misleading and false statements of material fact in any reports or document filed with the ___________. Under this section a purchaser must prove 2 things:
18, Securities and Exchange Commission
1- reliance on the defective statement
2- damages resulting from that reliance 1249
Auditor me a scape section 18 liability by proving that she acted in _______ and had _______ that the information was misleading. That is, she must show that she acted without _______.
Good faith, no knowledge, scienter 1249
The Private Securities Litigation Reform Act limits the liability of most auditors and securities professionals to the amount of an investors loss for which the defendant is responsible. This means that a defendant has _______ liability and need no longer fear being liable for investors entire losses when a fraudulent client is unable to pay its share of the damages.
Proportionate 1252
The SEC has adopted _________ (_______) to ensure securities analysts have no conflicts of interests and their reports are their own opinions without any bias.
Regulation AC (Analysts Certification) 1253
Under Regulation AC, analysts are ______ in trading for his personal account in ______ he recommends.
restricted, securities 1254
________ empowered the SEC to impose a fiduciary duty on brokers-dealers and investment advisors in their dealings with customers.
The Dodd-Frank Act 1255
The SEC Rule of Practice 102(e) allows the SEC to……
…..bar temporarily or permanently from practice before the SEC, a professional who has demonstrated a lack of qualifications required to practice before it. 1260
The personal records that a client entrusts to a professional during an engagement, such as accounting records during an audit, remain the property of the ______.
client 1261
Material created by a professional, such as working papers produced by independent auditors, belong to the _______, not the ____.
accountant, client 1261
Under the Sarbanes-Oxley Act, a requirement was made that audit or review working papers be retained for __________.
7 years 1262
In some states, clients enjoy an ________ privilege of confidentiality. This privilege does not exists in _____ matters. This doesn’t apply for other professionals generally.
accountant-client privilege, federal 1262
True or False: The FTC has no power to regulate anti-competitive practices that are governed by the Sherman, Clayton or Robinson-Patman Acts.
false 1309
A credit card issuer who fails to comply with the Fair Credit Billing Act forfeits its right to collect ______
$50 of the disputed amount 1326
Under the Consumer Product Safety Act, the government has the power to?
Issue rules banning hazardous products
Subsequent to the America Invents Act (AIA) U.S. switched from a first-to-invent ideology to a __________.
first-to-file 266
Under law of nature concerns, the PTO _______ issue patents natural phenomena and things that occur in nature.
cannot 266
Abstract ideas, scientific, and mathematical concepts ______ be patented.
cannot 266
Business methods ______ be patented.
can 266
exclusive rights to a patented invention generally exists for ____ ; however a design patent exists for ______.
20, 14 272
Under the ___________, a defendant may be held liable for infringement even though the subject matter he made, used, or sold contains elements that were not identical to those described in the pantentees’s claims of invention, if the elements of the defendants subject matter nonetheless may be seen as equivalent to those of the patented invention
Doctrine of equivalents 274
A party challenging a patent on the ground of invalidity must prove that the facts underlying the invalidity contentions by ___________ rather than a mere __________
Clear and convincing evidence, preponderance of the evidence 275
A defense of ______ rests on the notion that the invention was not sufficiently novel or was obvious, and thus did not merit a patent
invalidity 275
_____________ give certain exclusive rights to creators of original works of authorship.
Copyright law 276
Registration _____ necessary for the copy right to exist.
is not 276
With the enactment of the CTEA, the basic to ration rule for Works created in 1978 or thereafter is now ___________ plus ______. The duration rule for a work-for-hire is now ______ from first publication or ________ from creation, whichever comes first
Life of the author/creator, 70 years, 95 years, 120 years p.g277
Copyright laws first sale doctrine extinguishes a copyright owner’s rights regarding a particular copy of the copyrighted work once that copy has been _______.
Lawfully sold 281
3 elements of copyright infringement:
- defendant has access to the copyrighted work
- defendant engaged in enough copying that the resemblance between the allegedly infringing work and a copyrighted work does not seem coincidental
- there is substantial similarity between the two works. 285
A defense of ________ could make the following uses good candidates for protection from law suit from copyright infringement: criticism or comment; news reporting; and teaching, scholarship, or research.
fair use 286
The federal ___________ protects trademark owners against certain uses of their marks by third parties.
Lanham Act 291
A ______ is any word, name, symbol, device, or combination thereof used by manufacturer or seller to identify its products and distinguish them from the products of competitors.
trademark 291
Federal registration of a trademark last for ______,with renewals for additional _______ periods possible. However, the government must cancel it before this period if the registrant does not file for the extension within the _____ or _____.
10 years, 10 years, 5th or 6th year. 293
A mark may lose its protected status under trademark law if the courts rule it has become ______. Provide an example.
generic.
examples include: aspirin, escalator, and thermos. 295
Because the likelihood of _______ is critical to resolution of trademark infringement cases, courts have had plenty of occasions to make such determinations.
Confusion determination 295
An alternative to trademark infringement that could be sought in court is _______. This is where and association arises from the similarity between a mark or trade name in a famous mark that impairs the distinctiveness of the famous mark. This was enforced through enactment of the __________
Trademark dilution, Trademark Dilution Revision Act (TDRA) 296
trademark dissolution may also occur by _______ in which the reputation of the famous mark is harmed.
Tarnishment 296
To be protectable, a trade secret must usually have sufficient value or originality to provide an actual or potential competitive advantage. It need not possess the ________ required for _______ however.
novelty, patent protection 301
If an employee was hired for purposes other than inventing, but she nonetheless invents something, the patent is _____. However, if it is created on company time and/or with company resources, the employer gets royalty free rights to the invention under the ________
hers, Shop rights doctrine 274
____________ also goes by names such as product disparagement, slander of title, and trade libel.
injurious falsehood 305
In a lawsuit for _____________, one party to a contract claims that the defendants interference with the other parties performance of the contract wrongly caused the plaintiff to lose the benefit of that performance. The contract must already _____ and there must be ______.
Intentional interference with contractual relations, exist, intent 306
