1. When an independent audit report is incorporated by reference in an SEC registration statement, a prospectus that includes a statement about the independent accountant's involvement should refer to the independent accountant as a. Auditor of the financial reports. b. Management's designate before the SEC. c. Certified prepare of the report. d. Expert in auditing and accounting.
2. Which of the following is subject to the registration requirements of the Securities Act of 1933? a. Public sale of its bonds by a municipality. b. Public sale by a corporation of its negotiable five-year notes. c. Public sale of stock issued by a common carrier regulated by the Interstate Commerce Commission. d. Issuance of stock by a corporation to its existing stockholders pursuant to a stock split.
3. When there is evidence of a violation of the federal securities laws, the Securities and Exchange Commission lacks power to a. Subpoena witnesses. b. Compel the production of books and records anywhere in the U.S. c. Order an administrative hearing to determine responsibility for the violation and impose certain sanctions. d. Prosecute criminal cases.
4. Cooke, in his capacity as president of Tool Corp., was convicted of willful violations of the Securities Act of 1933 and the Securities Exchange Act of 1934. The sanctions under both acts a. Permit the imposition of only a fine. b. Permit the imposition of both a fine and a term of imprisonment. c. Are different since criminal sanctions are excluded from the Securities Exchange Act of 1934. d. Are different since criminal sanctions are excluded from the Securities Act of 1933.
5. Which of the following financing methods will be exempt from the registration requirements of the Securities Act of 1933? a. Direct public offering of stock to potential investors without the use of an underwriter. b. Interstate marketing of securities by a subsidiary which is engaged in intrastate commerce. c. Sale of long-term notes to a consortium of local banks. d. Public sale of non-convertible bonds to investors.
6. The provisions of the Securities Exchange Act of 1934 a. Do not require distribution of an annual report unless proxies are solicited. b. Require the distribution of financial statements prior to or concurrent with a proxy solicitation. c. Apply only to those corporations engaged in interstate commerce where there is a significant dispute between management and dissenting shareholders. d. Apply only to those corporations that have securities traded on a national securities exchange.
7. Which of the following statements is correct with respect to criminal prosecution under the Securities Acts? a. Reckless disregard for the truth is a sufficient basis for a criminal conviction. b. Personal monetary gain from the alleged criminal conduct is required in order to be convicted. c. The anti-fraud provisions of the Securities Acts are the only basis upon which a person can be indicted and convicted. d. Corporations are not subject to criminal prosecution.
8. The anti-fraud provisions of the Securities Act of 1933 and the Securities Exchange Act of 1934 a. Are the same insofar as the transactions to which they apply. b. Are unavailable to plaintiff's who are unable to establish diversity of citizenship & a minimum of $10,000 monetary damages. c. Contain criminal sanctions against those who engage in fraudulent activities. d. Contain remedies which are mutually exclusive of each other.
9. Although the Securities and Exchange Commission has broad powers in conducting a formal investigative proceeding, the SEC can not a. Impose monetary penalties without court proceedings. b. Compel a witness to appear. c. Subpoena records. d. Conduct its investigations secretly.
10. The president of XK Corporation has been charged by the Securities and Exchange Commission with a criminal violation of the Securities Exchange Act of 1934. Under these circumstances a. The SEC may elect to prosecute the case itself or turn the case over to the Justice Department. b. It is irrelevant whether the president had knowledge of his wrongdoing in determining whether to impose a fine or prison term. c. The SEC must elect between civil and criminal action but may not pursue both. d. A fine or prison term or both may be imposed.
11. The SEC has strengthened auditor independence by requiring that management a. Engage auditors to report in accordance with the Foreign Corrupt Practices Act. b. Report the nature of disagreements with former auditors. c. Select auditors through audit committees. d. Acknowledge their responsibility for the fairness of the financial statements.
12. The Securities Exchange Act of 1934 requires that certain persons register and that the securities of certain issuers be registered. In respect to such registration under the 1934 Act, which of the following statements is incorrect? a. All securities offered under the Securities Act of 1933 also must be registered under the 1934 Act. b. National securities exchanges must register. c. The equity securities of issuers, which are traded on a national securities exchange, must be registered. d. The equity securities of issuers having in excess of $1 million in assets and 500 or more stockholders which are traded in interstate commerce must be registered.
13. Which of the following securities or security transactions is automatically exempt under the Securities Act of 1933 from the Act's registration requirements? a. An offering of $3,000,000 or less of stock to 25 or fewer persons. b. A $10 million offering of first mortgage bonds to the public. c. An exchange by a corporation of its own securities with existing shareholders without payment of brokerage commissions. d. Sale by a director of her shares of stock providing that she owns less than 10% of the corporation's stock and that the sale is on a registered stock exchange.
14. Insofar as the Securities Act of 1933 and the Securities Exchange Act of 1934 are concerned with fraud a. The Acts are identical with respect to prescribing fraudulent transactions. b. The anti-fraud provisions are contained exclusively in the 1934 Act. c. The 1933 Act does not require proof of scienter in all circumstances whereas the 1934 Act does. d. Only the 1933 Act contains criminal sanctions against those found to be guilty of fraud.
15. Which of the following is required under the SEC Act of 1934 or the SEC's reporting requirements issued pursuant thereto? a. Current reporting by issuers of registered securities of certain specified corporate and financial events within ten days after the close of the month in which they occur. b. Quarterly audited financial reports and statements by those corporations listed on a national exchange. c. Reporting by issuers of securities which are traded over-the counter, but only if the securities are actively traded. d. Annual filing of audited financial reports by all corporations engaged in interstate commerce.
