Chapter 23 - Part 2

Question 1

What is Certiorari? (legal system thing)

Answer 1

A writ or order by which a higher court reviews a decision of a lower court.

Question 2

What do companies with substainal assets have to do before undertaking a merger? Why?

Answer 2

Notify the Federal Trade Commision. This notification gives the government an opportunity to prevent the merger ahead of time.

Question 3

What does substantial assets mean when related to companies that must notify the FTC about mergers.

Answer 3

If the acquiring company is purchasing stock or assets of the aquired company that are worth more than $212 million (adjusted annual for inflation annually)

Question 4

What is true about insider trading?

1. It is acceptable to tip off someone off as long as the insider does not profit from any transaction involving the information.
2. Prior plans to sell stock do not protect and insider.
3. Fiduciaries have to be full time permanent executive employees.
4. Someone who trades on inside information is liable only if he breaches a fiduciary duty.

Answer 4

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Question 5

A defense to a civil action brought under Section 10(b) and Rule 10b-5 of the 1934 Act would be:

1. that the statute of frauds was not observed.
2. that the seller of the securities was not in privity of contract with the plaintiffs.
3. that the sellers did not intentionally or recklessly make a false representation.
4. All of the above.

Answer 5

3

Question 6

Under what type of securities offering must the issuer determine if the investor is an accredited, sophisticated, or unaccredited investor?

1. Regulation D offering.
2. Public offering.
3. An interstate offering.
4. Regulation A offering.

Answer 6

1

Question 7

A Tippee:

1. knows the information he is providing is confidential.
2. know it was from an insider.
3. must deal with information provided by an insider who expects a profit.
4. all of these answers are correct.

Answer 7

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