BA 200-Chapter 19

Which of the following is IS a Section 12 violation?

-failure to file a registration statement -false statement in the prospectus -selling securities without registration

Which of the following can be done before the registration statement is effective?

Both tombstone ads and red herring

SwissAire, Inc. has filed a registration statement with the SEC for a public offering of common stock. The registration statement was completed on November 30, 1999, and filed on December 1, 1999. The statement became effective on December 30, 1999. Shares were first sold on December 31, 1999. When can SwissAire first run a tombstone ad?

December 1, 1999

Jane Fresno told her boyfriend that her firm had just landed a contract to sell 125 new airplanes to Delta Airlines. The news will not be public until the next day. Jane's boyfriend purchased 1,000 shares in Jane's company. Which of the following statements is correct?

Jane's boyfriend has violated Section 10b.

Which of the following is not required for the intrastate exemption?

Of the issuer's income, 100 percent must be earned in its resident state.

Maxine Knight is an investment banker who has just completed negotiations for a merger between two major motion picture studios. Maxine lives with Ron Heywood and suggests dinner to celebrate the successful negotiations that will become public in three days. Ron celebrates with Maxine and the next morning buys substantial blocks of shares in both the firms. After the merger is announced, the value of the shares doubles. Which of the following statements is true?

Ron has violated Section 10(b)

Pacific West Utility has made a takeover offer to the shareholders of San Diego Edison. The board and management are concerned about the ability of Pacific West to manage San Diego Edison and have solicited the help of Western Power. Western Power will make a tender offer to the shareholders of San Diego Edison that is $1.00 more than Pacific West's offer. Which of the following statements is true?

Western Power must comply with the Williams Act.

developer announced that a new apartment building was to be constructed. To have first chance at a unit in the building, you would have to deposit $250 per room. Each room was called a share of stock in the building. If you wanted a six-room apartment, you had to buy six shares of stock and later pay the sale price or rental rate. The stock price was to be refunded at the time you sold your apartment or quit renting and left the building. You could not sell the stock directly to another person. Is this stock a security?

Yes, because the sale meets the definition of a security.

Which of the following is NOT an accredited investor for purposes of Regulation D?

any person with income greater than $150,000

A primary offering is an:

initial offering of securities.

A comment or deficiency letter:

must be issued within 20 days of the filing of the registration statement.

Which of the following would not be considered a security under the 1933 Act?

pension fund

Regulation D offerings:

permit sales without registration.

Which of the following is not an exempt security under the 1933 Act?

promissory notes

Regulation A offerings:

still require registration.

Venture Capital, Inc. needs to raise $1 million in capital and has been able to obtain the agreements of ten insurance companies to invest $100,000 each. If Venture wishes to avoid the cost of full SEC registration, it should:

use a Rule 504 exemption.