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Federal Securities Acts

Federal Securities Acts MCQs

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A preliminary prospectus, permitted under SEC Regulations, is known as the

Unaudited prospectus.
Qualified prospectus.
“Blue-sky” prospectus.
“Red-herring” prospectus

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Under the Securities Exchange Act of 1934, which of the following types of instruments is excluded from the definition of “securities”?

Investment contracts.
Convertible debentures.
Nonconvertible debentures.
Certificates of deposit.

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A tombstone advertisement

May be substituted for the prospectus under certain circumstances.
May contain an offer to sell securities.
Notifies prospective investors that a previously-offered security has been withdrawn from the market and is therefore effectively “dead.”
Makes known the availability of a prospectus.

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Under the Securities Act of 1933, which of the following statements most accurately reflects how securities registration affects an investor?

The investor is provided with information on the stockholders of the offering corporation.
The investor is provided with information on the principal purposes for which the offering’s proceeds will be used.
The investor is guaranteed by the SEC that the facts contained in the registration statement are accurate.
The investor is assured by the SEC against loss resulting from purchasing the security.

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Which of the following statements concerning the prospectus required by the Securities Act of 1933 is correct?

The prospectus is a part of the registration statement.
The prospectus should enable the SEC to pass on the merits of the securities.
The prospectus must be filed after an offer to sell.
The prospectus is prohibited from being distributed to the public until the SEC approves the accuracy of the facts embodied therein.

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Sandy Corporation is considering the following issuances: I. Notes with maturities of three months to be used for commercial purposes and having a t...

I only.
II only.
I and III only.
I, II, and III.

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Sandy Corporation is considering the following issuances: I. Notes with maturities of three months to be used for commercial purposes and having a t...

I only.
II only.
I and III only.
I, II, and III.

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Which of the following is not a security under the definition for the Securities Act of 1933?

Any note.
Bond certificate of interest.
Debenture.
All of the above are securities under the Act.

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Which of the following securities would be regulated by the provisions of the Securities Act of 1933?

Securities issued by not-for-profit, charitable organizations.
Securities guaranteed by domestic governmental organizations.
Securities issued by savings and loan associations.
Securities issued by insurance companies.

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Which of the following securities is exempt from registration under the Securities Act of 1933?

Shares of nonvoting common stock, provided their par value is less than $1.00
A class of stock given in exchange for another class by the issuer to its existing stockholders without the issuer paying a commission.
Limited partnership interests sold for the purpose of acquiring funds to invest in bonds issued by the United States.
Corporate debentures that were previously subject to an effective registration statement, provided they are convertible into shares of common stock.

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Universal Corp. intends to sell its common stock to the public in an interstate offering that will be registered under the Securities Act of 1933. U...

Universal can make offers to sell its stock before filing a registration statement, provided that it does not actually issue stock certificates until after the registration is effective.
Universal’s registration statement becomes effective at the time it is filed, assuming the SEC does not object within twenty days thereafter.
A prospectus must be delivered to each purchaser of Universal’s common stock unless the purchaser qualifies as an accredited investor.
Universal’s filing of a registration statement with the SEC does not automatically result in compliance with the “blue-sky” laws of the states in which the offering will be made.

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If securities are exempt from the registration provisions of the Securities Act of 1933, any fraud committed in the course of selling such securitie...

Yes Yes
Yes No
No Yes
No No

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Issuers of securities are normally required under the Securities Act of 1933 to file a registration statement with the Securities Exchange Commissio...

To require more extensive reporting.
To be filed along with Form S-1.
To reduce the burden that issuers have under the securities laws.
To reduce the burden of disclosure that issuers have for intrastate issues of securities.

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Regulation D provides for important exemptions to registration of securities under the Securities Act of 1933. Which of the following would be exemp...

I only.
II only.
Both I and II.
Neither I nor II.

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Pix Corp. is making a $6,000,000 stock offering. Pix wants the offering exempt from registration under the Securities Act of 1933. Which of the foll...

Regulation A.
Regulation D, Rule 504.
Regulation D, Rule 505.
Regulation D, Rule 506.

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Eldridge Corporation is seeking to offer $7,000,000 of securities under Regulation D of the Securities Act of 1933. Which of the following is (are) ...

I only.
I and II only.
II and III only.
I, II, and III.

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An offering made under the provisions of Regulation A of the Securities Act of 1933 requires that the issuer

File an offering circular with the SEC.
Sell only to accredited investors.
Provide investors with the prior four years’ audited financial statements.
Provide investors with a proxy registration statement.

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Which of the following facts will result in an offering of securities being exempt from registration under the Securities Act of 1933?

The securities are nonvoting preferred stock.
The issuing corporation was closely held prior to the offering.
The sale or offer to sell the securities is made by a person other than an issuer, underwriter, or dealer.
The securities are AAA-rated debentures that are collateralized by first mortgages on property that has a market value of 200% of the offering price.

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Regulation D of the Securities Act of 1933

Restricts the number of purchasers of an offering to 35.
Permits an exempt offering to be sold to both accredited and nonaccredited investors.
Is limited to offers and sales of common stock that do not exceed $1.5 million.
Is exclusively available to small business corporations as defined by Regulation D.

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Frey, Inc. intends to make a $2,000,000 common stock offering under Rule 505 of Regulation D of the Securities Act of 1933. Frey

May sell the stock to an unlimited number of investors.
May make the offering through a general advertising.
Must notify the SEC within 15 days after the first sale of the offering.
Must provide all investors with a prospectus.

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Under Regulation D of the Securities Act of 1933, which of the following conditions apply to private placement offerings? The securities

Cannot be sold for longer than a six-month period.
Cannot be the subject of an immediate unregistered reoffering to the public.
Must be sold to accredited institutional investors.
Must be sold to fewer than twenty nonaccredited investors.

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Which of the following statements concerning an initial intrastate securities offering made by an issuer residing in and doing business in that stat...

The offering would be exempt from the registration requirements of the Securities Act of 1933.
The offering would be subject to the registration requirements of the Securities Exchange Act of 1934.
The offering would be regulated by the SEC.
The shares of the offering could not be resold to investors outside the state for at least one year.

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Pix Corp. is making a $6,000,000 stock offering. Pix wants the offering exempt from registration under the Securities Act of 1933. Which of the foll...

No more than 35 investors.
No more than 35 nonaccredited investors.
Accredited investors only.
Nonaccredited investors only.

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Which of the following transactions will be exempt from the full registration requirements of the Securities Act of 1933?

All intrastate offerings.
All offerings made under Regulation A.
Any resale of a security purchased under a Regulation D offering.
Any stockbroker transaction.

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Under Rule 504 of Regulation D of the Securities Act of 1933, which of the following is (are) required? I. No general offering or solicitation is pe...

I only.
II only.
Both I and II.
Neither I nor II.

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Dean, Inc., a publicly traded corporation, paid a $10,000 bribe to a local zoning official. The bribe was recorded in Dean’s financial statements ...

Federal Trade Commission Act.
Securities Act of 1933.
Securities Exchange Act of 1934.
North American Free Trade Act.

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Integral Corp. has assets in excess of $4 million, has 350 stockholders, and has issued common and preferred stock. Integral is subject to the repor...

Report the tender offer to the SEC.
Notify the SEC of stockholder “short swing” profits.
File the periodic report listing newly appointed officers.
Report the changes in the market price of its stock.

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Which of the following factors, by itself, requires a corporation to comply with the reporting requirements of the Securities Exchange Act of 1934?a...

Six hundred employees.
Shares listed on a national securities exchange.
Total assets of $2 million.
Four hundred holders of equity securities.

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The registration provisions of the Securities Exchange Act of 1934 require disclosure of all of the following information except the

Names of owners of at least 5% of any class of nonexempt equity security.
Bonus and profit-sharing arrangements.
Financial structure and nature of the business.
Names of officers and directors.

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Under the Securities Act of 1933, which of the following statements is correct concerning a public issuer of securities who has made a registered of...

The issuer is required to distribute an annual report to its stockholders.
The issuer is subject to the proxy rules of the SEC.
The issuer must file an annual report (Form 10-K) with the SEC.
The issuer is not required to file a quarterly report (Form 10-Q) with the SEC, unless a material event occurs.

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Which of the following persons is not an insider of a corporation subject to the Securities Exchange Act of 1934 registration and reporting requirem...

An attorney for the corporation.
An owner of 5% of the corporation’s outstanding debentures.
A member of the board of directors.
A stockholder who owns 10% of the outstanding common stock.

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The Securities Exchange Commission promulgated Rule 10b-5 from power it was given the Securities Exchange Act of 1934. Under this rule, it is unlawf...

Yes Yes
Yes No
No Yes
No No

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The antifraud provisions of Rule 10b-5 of the Securities Exchange Act of 1934

Apply only if the securities involved were registered under either the Securities Act of 1933 or the Securities Exchange Act of 1934.
Require that the plaintiff show negligence on the part of the defendant in misstating facts.
Require that the wrongful act must be accomplished through the mail, any other use of interstate commerce, or through a national securities exchange.
Apply only if the defendant acted with intent to defraud.

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Adler, Inc. is a reporting company under the Securities Exchange Act of 1934. The only security it has issued is voting common stock. Which of the f...

Because Adler is a reporting company, it is not required to file a registration statement under the Securities Act of 1933 for any future offerings of its common stock.
Adler need not file its proxy statements with the SEC because it has only one class of stock outstanding.
Any person who owns more than 10% of Adler’s common stock must file a report with the SEC.
It is unnecessary for the required annual report (Form 10-K) to include audited financial statements.

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Which of the following is correct concerning financial statements in annual reports (Form 10-K) and quarterly reports (Form 10-Q)?

Both Form 10-K and Form 10-Q must be audited by independent public accountants and both must be filed with the SEC.
Both Form 10-K and Form 10-Q must be audited by independent public accountants but neither need be filed with the SEC.
Although both Form 10-K and Form 10-Q must be filed with the SEC, only Form 10-K need be audited by independent public accountants.
Form 10-K must be audited by independent public accountants and must also be filed with the SEC; however, Form 10-Q need not be audited by independent public accountants nor filed with the SEC.

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Burk Corporation has issued securities that must be registered with the Securities Exchange Commission under the Securities Exchange Act of 1934. A ...

Because of this material event, Burk Corporation is required to file with the SEC, Forms 10-K and 10-Q.
Because of this material event, Burk Corporation is required to file Form 8-K.
Burk Corporation need not file any forms with the SEC concerning this material event if the relevant facts are fully disclosed in the audited financial statements.
Burk Corporation need not file any form concerning the material event if Burk Corporation has an exemption under Rules 504, 505, or 506 of Regulation D.

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Under the Sarbanes-Oxley Act which of the following officers must periodically certify that reports comply fully with relevant securities laws and a...

The chairman of the board and the chief executive officer.
The secretary and the chief executive officer.
The chief financial officer and the chief executive officer.
The chief risk officer and the chief executive officer.

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Which of the following is not an aspect of the Wall Street Reform and Consumer Protection (Dodd-Frank) Act of 2010?

The act increased the regulation of insurance companies.
The act prohibits banks from engaging in proprietary trading.
The act puts limits on the compensation of corporate chief executive officers.
The act requires mortgage originators to retain an economic interest in a portion of the credit risk of any securitized asset that they create and sell.

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The Wall Street Reform and Consumer Protection (Dodd- Frank) Act of 2010 requires

All members of the compensation committee of the board of directors to be independent.
All members of the corporate governance committee of the board of directors to be independent.
All voting members of the board of directors to be independent.
All members of the risk management committee of the board of directors to be independent.

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