Unit 8 Test Flashcards
(17 cards)
When might a court order treble (triple) damages under the Telephone Consumer Protection Act (TCPA)?
Willfully violating the act Engaging in puffery Committing any deceptive act Fraudulent selling door-to-door
Willfully violating the act
The willful or knowing violation of the Telephone Consumer Protection Act allows a court to award treble damages.
A consumer is told that he cannot receive a credit card because he receives public assistance benefits.
Under which act might he bring suit against the lender?
Fair Debt Collection Practices Act Truth in Lending Act Fair Credit Reporting Act Equal Credit Opportunity Act
Equal Credit Opportunity Act
The Equal Credit Opportunity Act prohibits denying credit or credit discrimination because an individual receives certain forms of income, such as public assistance benefits.
What is being used when a promotion matches the rest of a web page’s content?
Half-truth Native ad Red flag Bona fide error
Native ad
A native ad is an advertisement that follows the web page’s native form, or content, and functions as part of the user experience.
Under which type of exemption must an issuer believe that each unaccredited investor has sufficient knowledge to be capable of evaluating the investment’s potential return and risk?
Tier 2 public offerings Private placement Intrastate offerings Howey test
Private placement
A private placement exemption applies for transactions not involving any public offering and where the investors each have sufficient knowledge to understand and determine the securities’ merits and risks.
A person engages colleagues to invest in a new offshore company but uses the investments to pay themselves and other initial investors.
What is this type of arrangement?
Insider trading Tipper theory Ponzi scheme Tier 2 offering
Ponzi scheme
A Ponzi scheme is where a person engages in fraudulent investment activity that pays a return to investors from new capital to the person (and others) rather than from a legitimate investment.
A share of stock is determined to be part of an exempt transaction under Regulation A.
Even if it is exempt from the registration requirements, which law might still apply for antifraud provisions?
Regulation D Securities Act of 1933 Education Department General Administrative Regulations (EDGAR) Rule 144
Securities Act of 1933
Even if a security is exempt under Regulation A for registration, it is still subject to the antifraud provisions of the Securities Act of 1933.
Who is responsible for the establishment and maintenance of systems of internal control in a corporation?
Senior-level corporate officers Board of directors Public Company Accounting Oversight Board (PCAOB) External auditors
Senior-level corporate officers
The Sarbanes-Oxley Act requires high-level managers to establish and maintain an effective system of internal controls. The system must include disclosing controls and procedures to ensure that company financial reports are accurate and timely and to document financial results prior to reporting.
Who is responsible for filing the management’s assessment of internal controls report with the SEC?
Independent auditor Board of directors Corporate officers Audit committee
Independent auditor
Section 404(b) of the Sarbanes-Oxley Act of 2002 requires independent auditors to report on management’s assessment of internal controls to the SEC.
What is the Sarbanes-Oxley Act certification requirement for systems of internal control by the CEO and CFO?
To maintain an internal control system and disclose any deficiencies in the system to the Public Company Accounting Oversight Board (PCAOB) To maintain an internal control system and disclose any deficiencies in the system to the audit committee To maintain an internal control system and disclose any deficiencies in the system to the independent auditors To maintain an internal control system and disclose any deficiencies in the system to the board of directors
To maintain an internal control system and disclose any deficiencies in the system to the independent auditors
As per SOX-2002, the signing officer or officers must certify that they have established an internal control system to identify all material information and that any deficiencies in the system were disclosed to the auditors.
The Sarbanes-Oxley Act (SOX) of 2002 requires senior-level corporate officers to establish and maintain an effective system of internal controls.
What are internal controls?
Disclosure measures and procedures to ensure accuracy of company share price movements Disclosure measures and procedures to ensure accuracy of company operational performance reports Disclosure measures and procedures to ensure accuracy and timeliness of company financial reports Disclosure measures and procedures to ensure accuracy and timeliness of product safety results
Disclosure measures and procedures to ensure accuracy and timeliness of company financial reports
The Sarbanes-Oxley Act requires high-level managers to establish and maintain an effective system of internal controls. The system must include disclosure controls and procedures to ensure that company financial reports are accurate and timely and to document financial results prior to reporting.
A salesperson claims that many flavored waters contain no sugars, leading to weight loss. The salesperson neglects to mention that these same flavored waters may contain other types of artificial sweeteners, which may have negative health effects.
What has the salesperson’s statement likely contained?
Endorsement Bait-and-switch advertising Solicitation Half-truth
Half-truth
The salesperson’s statement contained a half-truth because he mentions sugar, but not the artificial sweeteners, which is a true but misleading and incomplete statement.
A business motto says, “they cannot believe that it’s not sour cream” when, in fact, the product is sour cream. The Federal Trade Commission issues a cease-and-desist order and demands that it advertises anew as producing sour cream.
What is this sanction called?
Restitution Native ad Counteradvertising Credit protection
Counteradvertising
When a business is required to advertise anew, it is complying with a sanction known as counteradvertising.
Which securities law or act governs when the Securities and Exchange Commission attempts to prohibit the use of manipulative practices in violation of its rules and regulations?
Securities Exchange Act of 1934 Securities Exchange Act of 1933 Blue sky laws Private Securities Litigation Reform Act
Securities Exchange Act of 1934
The Securities Exchange Act of 1934 applies to and governs these manipulative practices
Which firm would qualify as a well-known seasoned issuer (WKSI)?
A firm that has issued $250 million in securities in the last five years A firm that has offered $20 million in a twelve-month period A firm that has $1 billion stock outstanding A firm that has never issued securities before but is regularly known
A firm that has $1 billion stock outstanding
A firm with at least $700 million of stock outstanding would qualify as a well-known seasoned issuer.
Who monitors the external auditor of a company?
Public Company Accounting Oversight Board (PCAOB) Board of directors Audit committee CEO of the company
Audit committee
The Sarbanes-Oxley Act of 2002 entrusted the audit committee with the responsibility of appointing the external auditors.
Who certifies for the accuracy of information in the financial statements filed with the SEC?
The audit committee The CEO and CFO The independent auditor The board of directors
The CEO and CFO
The Sarbanes-Oxley Act (SOX) of 2002 requires the CEO and the CFO to certify financial statements that are filed with the SEC. CEOs and CFOs have to certify that filed financial reports fully comply with SEC requirements and that all of the information reported fairly represents in all material respects, the financial conditions and results of operations.
What is the stated objective of the Sarbanes-Oxley Act (SOX) of 2002?
To address corporate governance through increased shareholder accountability To address corporate governance through increased corporate creditor accountability To address corporate governance through increased stakeholder accountability To address corporate governance through increased corporate accountability
To address corporate governance through increased corporate accountability
The Congress passed the Sarbanes-Oxley Act of 2002 to address issues relating to corporate governance. Generally, the act attempts to increase corporate accountability by imposing strict disclosure requirements and harsh penalties for violations of securities laws.
