LEGL 2700 Epstein Unit 4 Exam Questions With Correct Answers
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Course
LEGL 2700
Institution
LEGL 2700
LEGL 2700 Epstein Unit 4 Exam Questions
With Correct Answers
What classifies broadly as a "security" for the purposes of federal regulation? - answerAny interest or
instrument that offers the right to subscribe to purchase stock, bond, or any certificate of interest.
Supreme Court says when one...
LEGL 2700 Epstein Unit 4 Exam Questions
With Correct Answers
What classifies broadly as a "security" for the purposes of federal regulation? - answer✔Any interest or
instrument that offers the right to subscribe to purchase stock, bond, or any certificate of interest.
Supreme Court says when one person invests money and looks to others to manage the money for
profit.
Who oversees security at the federal level? - answer✔Securities and Exchange Commissions (SEC):
- Responsible for administering the federal securities laws
Possess quasi-legislative, quasi-executive, and quasi-judicial powers
What is the Securities Act of 1933? - answer✔Applies to the initial sale of the security.
Requires the disclosure of information to the potential investors.
Information must be true and not misleading.
Penalties for violating Securities Act of 1933? - answer✔Criminal Punishment, Civil liability, Equitable
remedy of an injunction
What is the Securities Exchange Act of 1934? - answer✔Regulates transfers of securities AFTER the
initial sale
Created the Securities and Exchange Commission (SEC)
Illegal to sell unregistered securities on national exchange
What are the phases of going public? - answer✔Prefiling Period, Waiting Period, Posteffective Period
Prefiling Period - answer✔Legal to engage in preliminary negotiations and agreements with
underwriters
Illegal to sell the securities
Waiting Period - answer✔Generally 20 days to allow SEC to review
Still illegal to sell securities
Not illegal to solicit offers, just can't accept them yet
Posteffective Period - answer✔Sales can commence
What documents are required in going public? - answer✔Registration Statement and Prospectus
Registration Statement - answer✔Detailed disclosure of financial information about the issuer and
controlling individuals
Prospectus - answer✔Contains financial information related to issuer and controlling persons:
- Provided to interested investor
- Just conform to statutory requirements (does not mean it is a good investment)
What players are involved in going public? - answer✔Issuer, Underwriter, Seller
Issuer - answer✔Individual or business organization offering a security for sale to the public
Underwriter - answer✔Anyone who participates in the original distribution of securities
Sells securities for issuer or guarantees the sale (generally the larger investment bankers)
Seller - answer✔Anyone who contracts with a purchaser causing the purchase to occur
Who is an insider? - answer✔Officer, Director, and large share owners
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