Federal Securities Acts Flashcards Preview

Agency Law > Federal Securities Acts > Flashcards

Flashcards in Federal Securities Acts Deck (16)
Loading flashcards...
1
Q
What are the key points of the 1933 Securities Act?
A
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
2
Q
What entities are exempt from filing registration statements under the 1933 Securities Act?
A
Banks; Commercial Paper; Farmers; Co-ops; Charities; Governments

Also exempt: Securities sold in ONE state; where investors are residents; 80% of business done in one state; and resales can't occur within 9 months to interstate parties.
3
Q
What are the key points of the 1933 Securities Act; Regulation A?
A
Issuer can issue $50M of securities per year and be exempt if they file a notice with the SEC

Non-issuers (AKA a private individual) can sell $1.5M per year and be exempt
4
Q
Under the 1933 Securities Act; Regulation D; what are Rules 504; 505 and 506?
A
Rule 504- Max Amount per year: $1M; Max Investors: Unlimited

Rule 505 - Max Amount per year: $5M; Max Investors: 35 Unaccredited or Unlimited Accredited

Rule 506 - Max Amount per year: Unlimited; Same as 505; but Unaccredited investors must be sophisticated
5
Q
What are the registration form options under the 1933 Securities Act?

A
S-1 - Long Form or

S-2 and S-3 - Less Detailed and preferred by issuers
6
Q
Name the securities registered under the Securities Act of 1933.
A
Stocks
Stock Options
Stock Warrants
Limited Partnership Interests - General Partnerships not allowed
Bonds
7
Q
Who can sue under the Securities Act of 1933?
A
Purchasers of securities only
8
Q
Name the Requirements for Accountant to be liable under the Securities Act of 1933.
A
Damages & Material Misstatements Only

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
9
Q
Name the Defenses of an Accountant under the Securities Act of 1933.
A
Accountant used Due Diligence

Accountant followed GAAP

Damages weren't caused by accountant's work

Plaintiff knew of the material misstatements
10
Q
What does the Securities Act of 1934 govern?
A
The trading/selling of securities after the IPO

11
Q
What reports must be filed under the Securities Act of 1934?
A
Form 10-K Annual Report - Must be audited

Form 10-Q Quarterly Report - Must be reviewed; but not audited

Form 8-K - A notice of a material event; Must be filed within 4 days of event
12
Q
Who can sue under the Securities Act of 1934?
A
Purchases and Sellers of Securities
13
Q
Name the Requirements for an Accountant to be liable for fraud under the Securities Act of 1934.
A
Damages

Material Misstatements

Reliance on financial statements

Scienter or reckless disregard for the truth
14
Q
What procedures must an Accountant have in place under the Securities Act of 1934?
A
Accountant must have procedures in place to:
Determine if Going Concern is an issue
Determine if any material related party transactions occurred

Determine if material illegal acts occurred
15
Q
Insider trading rules under the Securities Act of 1934 apply to which individuals?
A
Officers; Directors and 10% Owners
16
Q
What are the Proxy Solicitation Requirements under the Securities Act of 1934?
A
Proxy must give shareholders audited balance sheets from 2 most recent years

o Requirement holds true even if one class of stock