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Flashcards in R5pt5-Fed.Sec.Acts Deck (33)
1

What are the key points of the 1933 Securities Act?

- Regulates original issuance of Sec.

- 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

What entities are exempt from filing registration statements under the 1933 Securities Act?

Banks; Commercial Paper (within 9 months); Farmers; Co-ops; Charities; Governments, Railroads, insurance policy

- Securities sold in ONE state; where investors are residents; 80% of business done in one state.

3

What are the key points of the 1933 Securities Act; Regulation A?

- Sales may not Exceed $5 million in a 12-month period

- Files Offering Statement

- Simplified form Non-issuers (AKA a private individual) can sell $1.5M per year and be exempt

4

Under the 1933 Securities Act; Regulation D; what is Rule 504?

- Max Amount per year: $1M;

- Max Investors: Unlimited

5

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

6

Name the securities registered under the Securities Act of 1933.

Stocks, Stock Options, Stock Warrants, Limited Partnership Interests, Bonds

- General Partnerships not allowed

7

Who can sue under the Securities Act of 1933?

Purchasers of securities only

8

Name the Requirements for Accountant to be liable under the Securities Act of 1933.

Damages & Material Misstatements Only

- 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

Name the Defenses of an Accountant under the Securities Act of 1933.

- Accountant used Due Diligence Accountant followed GAAP

- Damages weren't caused by accountant's work

- Plaintiff knew of the material misstatements

10

What does the Securities Act of 1934 govern?

The trading/selling of securities after the IPO

11

What reports must be filed under the Securities Act of 1934?

- Form 10-K Annual Report

- Form 10-Q Quarterly Report

- Form 8-K

12

Who can sue under the Securities Act of 1934?

Purchases and Sellers of Securities

13

Name the Requirements for an Accountant to be liable for fraud under the Securities Act of 1934.

- Damages

- Material Misstatements

- Reliance on financial statements

- Scienter or reckless disregard for the truth

14

What procedures must an Accountant have in place under the Securities Act of 1934?

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

Insider trading rules under the Securities Act of 1934 apply to which individuals?

Officers; Directors and 10% Owners

16

What are the Proxy Solicitation Requirements under the Securities Act of 1934?

- Proxy must give shareholders audited balance sheets from 2 most recent years

- Requirement holds true even if one class of stock

17

When a CPA signs off on F/S & can be held Liable when the Plaintiff:

Section 11 of 1933 Act:

- Acquires the stock

- Suffered a Loss

- F/S contained Misrepresentation

18

What are Securities & Investment Contracts?

- Stocks- Bonds - Oil Well- Warrants- Limited Partnership

19

What are NOT Securities & Investment Contracts?

- CDs

- General Partnership interests

20

What is the GOAL of the Sec. Act of 1933?

- Assure that investors have sufficient information on which to make an informed investment decision

21

How does the Sec. Act of 1933 accomplish its Goal?

- Requiring Most issuers to register new issues of securities with SEC

&

- Provide Prospectuses containing material information regarding the securities to prospective investors

22

What is the Prospectus?

- A written/radio/tv offer to sell securities

23

What is a Shelf Registration?

- Prepare one registration statement for all securities that they will offer in the future

24

What are the General Conditions for Reg. D that apply to Rules: 504,505,506?

- No Advertising

- Immediate Resale of Public Prohibited

- SEC must be informed within 15 days after the 1st Sale

25

Under the 1933 Securities Act; Regulation D; what are Rule 505?

- Max Amount per year: $5M

- Max Investors: 35 Unaccredited OR

Unlimited Accredited:

- At Least $1Mil net worth or $200k annual income

26

Under the 1933 Securities Act; Regulation D; what is Rule 506?

- Max Amount per year: Unlimited $

- Same as 505

~ But Unaccredited investors must be sophisticated

27

Disclosure requirements for 1933 Sec. Act for Rule 505:

If only Accredited Investors:

- No disclosure is req. If one Unaccredited investor then:

~All investors must be given at least an annual report with audited F/S.

28

What are the two types of companies must register their securities?

- Whose shares are traded on a National Exchange

OR

- More then $10Million in Assets & at least 2,000 shareholders

OR

- 500 shareholders who are not accredited

29

What is the filing requirement for Form 10-K?

- Annual Report

- Must be audited

- Filed within 60 days for Large Corps

- 90 days For Small Corps.

30

What is the filing requirement for Form 10-Q?

- Quarterly Report

- Must be reviewed; but not audited

- Filed within 40 days for Large Bus.

- Filed within 45 days for Small Bus.

31

What is the filing requirement for Form 8-K?

- A notice of a material event

- Must be filed within 4 days of event

32

33

Under Regulation D of the Sect. Act of 1933, Who can a Retricted Security holder Resell to?

- As Part of another Transaction exempt from Registration