BLAW terms final

BNY Mellon Case

BNY Mellon gave an internship to two middle eastern students in hopes to have business benefits with the middle eastern political authorities. (bribing in a way)

howey test

Created by the U.S. Supreme Court; it defines a security as an investment in a common enterprise that earns profits from the efforts of others.

red flag rule

Creditors (e.g., credit card companies) must implement a warning system to place account holders on notice of unusual account activity. This proactive plan is mandated by ____.

churning

Illegal practices of buying excess/selling stocks to make commissions earned on transaction.

2 yr audited balance sheet 3 yr audited statement of income and cash flows

SEC disclosure requirements

texas DTPA

The primary tool the Office of the Attorney General uses to protect Texas consumers; law that lists many practices that are false, deceptive, or misleading.

Foreign Corrupt Practices Act of 1977

a prohibition of offering a bribe to foreign government officials

stocks (equity)

a security that represents the ownership of a fraction of a corporation. This entitles the owner of the stock to a proportion of the corporation's assets and profits equal to how much stock they own; units are shares

Blue Sky Laws

a state law in the United States that regulates the offering and sale of securities ostensibly to protect the public from fraud

mutual funds

open-end companies that offer no specific number of shares and can expand as long as people invest with them.

September 4, 2019

Jill buys a stove at Texas Appliances on June 1,2019. It breaks down on July 1 and Texas the seller will not honor its 10-year warranty of the stove. Jill sends a letter under Texas DTPA received on July 3 notifying them of this breach of contract and demands a financial amount as her remedy. She can go to court and sue Texas Appliance at the earliest ______.

$1,200 (3 x 12 = 36 months; $200 x 36 mo = $7200) ($7200 - $6000 (balance) = $1200)

John goes to Davis General Motors Car dealership and buys a car for $20,000. He pays $14,000 down and signs a car note from the dealer to borrow the $6,000 balance and he must make 3 years' worth of equal consecutive monthly payments (interest and principal) on the first day of each month in the amount of $200. Under TILA, his finance charges will be ______.

c

John owes ABC Company $10,000 for a used car he bought. He refuses to pay (no good reason), and ABC Company turns his case over to a collection agency. They call John's boss at his job and tell her about the debt John owes (Act #1.) They also call John's home at 4:00 PM and leave a voice message on his telephone asking him to call them about this debt (Act #2). Which statement below most accurately describes the legality of the Acts under the Federal Debt Collection Practices Act (FDCPA)? a. Both Acts are in violation of Federal Debt Collection Practices Act (FDCPA). b. Neither of the Acts is in violation of FDCPA. c. Act #1 violates the FDCPA, but Act #2 does not d. Act #2 violates the FDCPA, but Act #1 does not

$4,500

John's car breaks down. He takes it to Bob's Car Shop where they say he needs a new" cluster" and he is charged $2,000 for its installation. His friend later says that was a scam-no "cluster" was needed, car was easily fixable for no more than $500. He is furious. John can bring a Texas DTPA claim seeking his maximum damages of: __________.

$500; $50

Under applicable federal regulations and laws, personal liability for a cardholder whose ATM card is stolen (and reported by holder) is limited to ____. For their personal credit card (stolen or lost but promptly reported) their personal liability is limited to ______________________. (In order of mention above, the separate liability correct limits for ATM cards and credit cards are below.)

45 days

Under the credit card act, When companies raise rates, they must give cardholders __________ notice.

texas DTPA

When you fall victim to illegal practices covered by the _________, you may have the right to sue for damages under the act.

60-day

______ notice letter is required with treble damages under DTPA

investment advisers act

a United States federal law that was created to monitor and regulate the activities of investment advisers as defined by the law.

prospectus

a document providing the legal offering of the sale of the security; helps evaluate a security aka schedule A

bonds

a fixed income instrument that represents a loan made by an investor to a borrower (typically corporate or governmental). Bonds are used by companies, municipalities, states, and sovereign governments to finance projects and operations.; owners are debt holders / creditors of issue

Food, Drug and Cosmetic Act of 1938

the act greatly expanded the regulatory power of the FDA by providing the agency with the power not only to extend the standards for foods beyond certain goods but also to prohibit false advertising of drugs, classify unsafe foods, add new enforcement powers, form inspection systems, and set safe levels of additives in foods. (445)

texas gulf sulfur case

A corporation in the mining field who thought there was gold in the hills in the remote part of Canada. They buy thousands of acres of land. They tell the SEC in a disclosure law that they have news that will impact their stock and set a date. Some executives of the company decided to purchase shares of their stock before the announcement. After it was announced, the shares went up 8 points which made them a profit. The court found them guilty of ____ and they had to disgorge their earnings.

b

Before filing a lawsuit against a company under the Texas DTPA, a Texas consumer must _____________. a. Provide written notice of the proposed claim in a local newspaper b. Send the seller-company a demand letter citing the specific breach of DTPA c. Send the seller-company a demand letter alleging the specific breach of federal statute law which have been committed. d. Establish that he/she has not committed a prior infringement of patent

churning

Bob is an investment adviser under SEC rules with power to trade funds in John's stock account. Bob makes a small (i.e.,1%) commission on every trade (buy or sell) he makes for his client. Bob makes many trades for John and in total invests $1,000,000 of John's money. After a year, Bob has made $35,000 in commissions but the value of John's account has shrunk to $900,000. This is an example of ___________________

FDCPA (Fair Debt Collection Practices Act)

Creditors have the right to collect debts they are owed. If not repaid, under state law, they may go to court and ask for an order to garnish(set aside a portion of) the wages of the debtor to pay the debt, but that can be a costly process. If unsuccessful in collecting a debt, a creditor can sell the debt to a debt collection agency and pay the agency a commission for the funds it collects.

tender offers

Example: Company A is trying to buy Company B. Company A tells stock owners of Company B (CB) they will buy their shares in exchange for stock in Company A (CA) or in exchange for cash. If CB buys enough stock of CA, they now have control over CA. CB has to buy all shares not just 51%.

bait and switch

Macy's advertises "Pendleton Dresses on Sale at 20% Off on December 20-Limited Quantity Available So Come When Store Opens at 10:00 AM." Sally has always wanted a fancy Pendleton dress and goes there at 10:10 AM and is told they are out of Pendleton dresses but she can buy a new Mars brand dress which is stated by the clerk to be "an even-better dress than Pendleton" This appears to be a case of___________________.

misstatements

Misleading statements and material omissions in securities registration material; An investor can sue to recover losses made by ____.

securities fraud

Misrepresentation of what you are selling or going to offer to the public. False and misleading information in the original registration materials or information obtained from later disclosures such as public statements made by corporate representatives.

insider trading

Prohibits the buying and selling of stock by persons who have access to info not yet made public. "Material nonpublic information"

EFT Act (Electronics Funds Transfer)

Provide a basic framework establishing the rights, liabilities, and responsibilities of participants in the electronic transfer systems -ATM deposits or other transactions -Direct deposits of paychecks -Debit cards used to buy goods or services -Automatic bill-paying services -Telephone transfers to credit cards (presuming a written agreement exists).

fair credit billing act

Provides consumers with a means to dispute a billing error on open-ended credit accounts (credit and charge cards). 1. billing error - 60 days notify; creditor answers in 30 days of receipt; 90 days to resolve problem and notify consumer 2. prohibits mailing unsolicited cards 3. procedures to report lost/stolen cc's; liability for unauthorized charges $50

equity financing

Raising funds through the sale of company stock; purchaser of shares of stock gains an ownership interest, or equitable interest, in the corporation. Shareholders have a claim on a portion of the future profits (if any) of the corporation.

offshoring outsourcing franchisor/franchisee franchise agreement foreign distribution agreement licensing of foreign manufacturing foreign subsidiary joint venture nationalization transparency international (nongovernmental. org)

Rank RISK MANAGEMENT (SAFER TO RISKIEST) US location and sell goods online

F

T/F the SEC rules on the merit of an offering and gives opinion about likelihood of success of a proposed business

True

T/F: under the credit card act, finance charges may not be imposed on both current and previous balance (double cycle billing)

A bribe as cash or "anything of value" vs facilitating payments

The Act recognizes that some payments are necessary and routine. An exception exists for a "facilitating or expediting payment ... the purpose of which is to expedite or secure the performance of a routine government action." Such "routine actions" normally include bribes for services such as processing visas and providing utilities or transportation services.

Corporate finance

The business function of obtaining funds for a company and managing them to accomplish the company's objectives.

one

Under the credit card act, restrictions are placed on late fees and when they are imposed; no more than ______ fee may be charged in a billing cycle if a debtor goes over the card limit; and there may not be charged for Internet or telephone access when making payments.

21

Under the credit card act, statements must be sent at least ____ days before a payment is due.

$12,000

Vronsky is an executive at ABC Company. On January 1, 2019, he was given options by ABC allowing him to buy up to 1,000 shares of ABC shares at any time during 2019 at a price of $40 per share. (On the day he was given these options, the market price of ABC shares was $28 per share.) On December 1, 2019, the market share price was $52, and John exercised his option to buy all 1,000 shares on that date. What was his profit?

treble damages

a term that indicates that a statute permits a court to triple the amount of the actual/compensatory damages to be awarded to a prevailing plaintiff. Treble damages are a multiple of, and not an addition to, actual damages in some instances.

credit card act

amended the Truth-in-Lending Act. It restricts certain practices by credit card companies: • Issuers may not raise interest rates on an existing balance and promotional (low) rates must last at least six months. • When companies raise rates, they must give cardholders 45 days' notice. • Restrictions are placed on late fees and when they are imposed; no more than one fee may be charged in a billing cycle if a debtor goes over the card limit; and there may not be charged for Internet or telephone access when making payments. • Cards may not be issued to consumers under age 21 unless they have independent means of income or get someone over 21 to cosign on the account. • Finance charges may not be imposed on both the current and previous balance (double-cycle billing). • Payments made on a credit card must be applied to the highest interest rate portion of the debt first. • Statements must be sent at least 21 days before a payment is due. • Gift cards may not expire for at least five years.

Equal Credit Opportunity Act of 1974

an act added to the CCPA to prohibit credit discrimi-nation on the basis of race, sex, color, religion, national origin, marital status, receipt of public benefits, the good-faith exercise of the applicant's rights under any part of the CCPA, or age(provided the applicant is old enough to sign a contract). Creditors are prohibited from using such criteria, known as prohibited bases, in determining creditworthiness.

Lanham act

another way that false advertising claims may be struck down, and one that can be far more expensive to a false advertising than most FTC actions, is when a private party brings a suit

FDA

charged with monitoring food and drug safety

prescription drugs

drugs that could be obtained only with the permission of a physician

1. invest money 2. common enterprise 3. hopeful profit 4. profits by ppl other than investors

elements of howey test

1. private placement 2. amount raised below $5M in funds solicited over 12 months 3. WKSI (well known seasoned issuers)

exemptions from registration

FTC v. QT

false advertisement that Q-Ray bracelet provided instant pain relief from arthritis/chronic conditions and deceptive refund policy; placebo effect and false therapeutic claims

food safety act of 1906

focused on sanitation and misbranding of food and drug products

SEC (Securities and Exchange Commission)

he agency charged with enforcing and administering federal securities laws. The SEC is an independent agency that has five members appointed by the president for five-year terms.; staff is examiners, attorneys, accountants, financial analysts

investment company act

hese are companies that invest and trade as securities. Vanguard, Fidelity, TD Ameritrade.

Unfair Debt Collection Practices:

including threats of violence or arrest, obscene language, the publication of a list of delinquent consumers, and harassing phone calls—are prohibited. Debt collectors may not discuss the debts with other people, including the debtor's employer. The Act prohibits the use of false or misleading representations in collecting a debt.

$50

liability for unauthorized charges on credit cards reported lost/stolen

Scalping

professionals buy stocks for personal benefit, then urges investors to buy the stock so the price rises to the benefit of the professional.

Advertising substantiation program

program that supports claims about products; requires advertisers and advertising agencies to have a reasonable basis before they make claims

drug safety act of 1938

prohibits the sale of any drug until the FDA gives approval.

20 days

registration comes into effect ___________ after it is filed

1. prospectus 2. info required by SEC

registration statement requirements

TILA

regulates credit bureaus (consumer reporting agencies). It focuses on confidentiality and accuracy in consumer credit reports. No limit is placed on the information that consumer-reporting agencies may include in their files, such as information on political beliefs or sexual practices, so long as the information is accurate.

Kefauver amendment of 1962

requires the FDA to approve drugs based on their proven effectiveness-- not just on their safety.

nutritional labeling act of 1996

rpequires the FDA to issue nutrition labels for hundreds of thousands of products

additional damages; 3

treble damages under DTPA provides that plaintiff can recover _____ up to ____ times the amount of economic damages if the defendant acted knowingly/intentionally

3; mental anguish

treble damages under DTPA provides that plaintiff can recover up to ____ times the amount of __________ if the defendant acted unintentionally

6 months

under credit card act, Issuers may not raise interest rates on an existing balance and promotional (low) rates must last at least ________.

21; 21

under the credit card act, Cards may not be issued to consumers under age ____ unless they have independent means of income or get someone over ____ to cosign on the account.

5

under the credit card act, gift cards cannot expire for at least _____ years.

Siemen's case

violated the FCPA by bribing people in China and other government officials from other countries to buy Siemens stuff. Siemen was investigated and paid 1.6 billion in penalties.

federal trade commission 1915

was established a century ago to help enforce the antitrust laws; also devotes resources to its Bureau of Consumer Protection, which handles matters such as deceptive business advertising and marketing practice

60; 30; 90

with billing errors under the fair credit billing act, the consumer must notify creditor within ____ days in writing of disputed charge; creditor must answer complaint within ____ days and solve problem in ______ days.