Regulation Essay

1199 words - 5 pages

Defining a Security
Which of the following transactions is subject to registration requirements of the Securities Act of 1933?
A. The public sale of stock of a trucking company regulated by the Interstate Commerce Commission.
B. A public sale of municipal bonds issued by a city government.
C. The issuance of stock by a publicly-traded corporation to its existing shareholders because of a stock split.
D. The public sale by a corporation of its negotiable 10-year notes.
Which of the following is least likely to be considered a security under the Securities Act of 1933?
A. Stock options.
B. Warrants.
C. General partnership interests.
D. Limited ...view middle of the document...

D. None of the above.
Which of the following is a "security" for federal securities law purposes?
A. Shares of corporate stock.
B. Limited partnership interests.
C. Fractional undivided interests in oil.
D. All of the above
Alliance Leasing Corp. located and recruited more than 1,500 investors from all over the U.S. to invest in an enterprise that used investor money to buy commercial office or kitchen equipment, that was then leased out to third-party lessees. Investors' funds were to be placed in special accounts at either Wells Fargo Bank or Merrill Lynch, and Alliance was to use the capital to "engage in a single or multiple transactions with a lessee." In several cases, Alliance bundled the leases together in packages of several million dollars each, which were purchased by institutional investors. The lease payments by the lessees were then to be paid to the investors on a monthly basis for two years with a balloon payment at the end of the two-year period. Alliance represented that investors would earn a return of 14% per year (as would Alliance, which was splitting the profits with investors 50/50) and that the investment was "low risk." After Alliance went bankrupt, investors sued its principals for securities fraud. Defendants claimed that no "securities" were involved. Which of the following is true?
A. These interests are "securities."
B. These interests are not securities because the interests were not bought over an organized stock market.
C. These interests are not securities because there is no common interest.
D. B and C.
The Registration Process
Non-WKSI issuer World Corp. wanted to make a public offering of its common stock. On May 10, World prepared and filed a registration statement with the SEC.
On May 20, World placed a "tombstone ad" announcing that it was making a public offering. On May 25, World issued a preliminary prospectus and the registration statement became effective on May 30.
On what date may World first sell the shares?
A. May 10.
B. May 20.
C. May 25.
D. May 30.
The registration requirements of the Securities Act of 1933 are intended to provide information to the SEC to enable it to
A. Evaluate the financial merits of the securities being offered.
B. Ensure that investors are provided with adequate information on which to base investment decisions.
C. Prevent public offerings of securities when management fraud or unethical conduct is suspected.
D. Assure investors of accuracy of the facts presented in the financial statements
Which of the following statements concerning the prospectus required by the Securities Act of 1933 is correct?
A. The prospectus is a part of the registration statement.
B. The...

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