Federal Security Act Flashcards
What are the key points of the 1933 Securities Act?
Governs Initial Public Offerings (not subsequent sales). Covers registration statements and accompanying information filed with SEC. Information must include audited financial statements & a prospectus. Note: Even if a company is exempt from registering under the 1934 Act; they still must adhere to the anti-fraud provisions of the Act
What entities are exempt from filing registration statements under the 1933 Securities Act?
Regulation A, D Banks Commercial Paper Non-profit (Churches) Farmers Intrastate 80% in 1 state cannt resell 9 month Governments (railroad, muni) Stock dividents, split Insurance
What are the key points of the 1933 Securities Act; Regulation A?
Issuer=issue Less $50M of securities per year = exempt if file a notice with the SEC
Non-issuers=(AKA a private individual)= sell less $1.5M per year = exempt
Under the 1933 Securities Act; Regulation D; what are Rules 504; 505 and 506?
Rule 504- $1M; Unlimited Investors
Rule 505 - $5M; 35 Unaccredited or Unlimited Accredited
Rule 506 - $Unlimited 35 sophisticated or unlimited Accredited
What are the registration form options under the 1933 Securities Act?
S-1 - Long Form or
S-2 and S-3 - Less Detailed and preferred by issuers
Name the securities registered under the Securities Act of 1933.
Stocks Stock Options Stock Warrants Limited Partnership Interests - General Partnerships not allowed Bonds
Who can sue under the Securities Act of 1933?
Purchasers of securities only
Name the Requirements for Accountant to be liable under the Securities Act of 1933.
Material Misstatements & Loss Only (M-OSS)
o Reliance on financial statements are not a requirement unless purchased more than a year after the security is registered
Proving negligence is not a requirement
Name the Defenses of an Accountant under the Securities Act of 1933.
GAAP/GAAS/Due Diligence
Damages weren’t caused by accountant’s work
Plaintiff knew of the material misstatements
What does the Securities Act of 1934 govern?
The trading/selling of securities after the IPO
What reports must be filed under the Securities Act of 1934?
10-K Annual - audited
10-Q Quarterly-reviewed; not audited
8-K - material event notice -4 days of event
Who can sue under the Securities Act of 1934?
Purchases and Sellers of Securities
Name the Requirements for an Accountant to be liable for fraud under the Securities Act of 1934.
Rely on Loss of Material Scienter
What procedures must an Accountant have in place under the Securities Act of 1934?
Accountant must have procedures in place to:
Going Concern is an issue
Material related party transactions occurred
Material illegal acts occurred
Insider trading rules under the Securities Act of 1934 apply to which individuals?
Officers
Directors
10% Owners
