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thesame2
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| Posted: 12 Jul 2009 at 00:43 | IP Logged
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1. The antifraud provision of Rule 10b-5 of the securities Exchange Act of 1934 (c)
a. Apply only if the securities involved were registered under either the Securities Act of 1933 or the Securities Exchange Act of 1934.
b. Require that the plaintiff show negligence on the part of the defendant in misstating facts.
c. Require that the wrongful act must be accomplished through the mail, any other use of interstate commerce, or through a national securities exchange
d. Apply only if the defendant acted with intent to defaud
Why c is right and "d" is wrong?
2. Dean, Inc., a publicly traded corporation, paid a $10000 bribe to a local zoning official. The bribe was recorded in Dean's financial statements as a consulting fee. Dean's unaudited financial statements were submitted to the SEC as part of a quarterly filing. Which of the following federal statutes did Dean violate? (c)
a. Federal Trade Commission Act
b. Securities Act of 1933
c. Securities Exchange Act of 1934
d. North American Free Trade Act
Why choose "c" instead of "d"?
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roswellpodsquad
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| Posted: 12 Jul 2009 at 00:47 | IP Logged
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#1. D is wrong be/c under Rule 10b-5 does not apply ONLY IF the
defendant acted with the intent to defraud. Remember they must also prove
purchase/sell of securities, suffered a loss, material misstatement existed, &
also reliance.
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roswellpodsquad
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| Posted: 12 Jul 2009 at 00:54 | IP Logged
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#2 since the bribe was recorded as a consulting fee (which it obviously was
not a consulting fee) a misstatement exists in the financials. Therefore, I
would concluded the answer should be b or c. Since #2 situations does not
involve and IPO the next logical choice would be c. Also, when I studied REG
I never came across anything called the North American Free Trade Act so I
assumed it was a distractor.
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Ads1982
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| Posted: 12 Jul 2009 at 01:46 | IP Logged
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This is in regards to Question #1. A requirement of 10b-5 is that the defendant acted with scienter. Scienter is proven by intent to deceive or reckless disregard for the truth. As such, answer d is not totally correct.
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Topic: 2MCQ@ Federal Securities Regulation
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