Exam 4 - Ch 23, 24, 25, 27, 2
Industrial Solvents Inc. averages $15,000 profit per day before deciding to ignore air pollution standards, after which the average is $30,000. Industrial Solvents is subject to a fine of
$30,000 per day.
The SEC's antifraud Rule 10b-5 prohibits trading on the basis of inside information of a business corporation's stock by
Anyone who bases his or her trading activities on the inside information.
Adjudication is a quasi-judicial function performed by administrative agencies. Adjudicatory hearings resemble a trial and are conducted by an administrative law judge (ALJ). Regarding adjudicatory hearings, which of the following statements is true?
Adjudicatory hearings follow much less restrictive rules of evidence than trials in other courts.
Rey Corp.'s management intends to solicit proxies relating to its annual meeting at which directors will be elected. Rey is subject to the registration and reporting requirements of the Securities Exchange Act of 1934. As a result, Rey must furnish its shareholders with
An annual report containing its audited balance sheets for the 2 most recent years.
A person who violates the Clean Water Act may be subject to
Civil and criminal liability.
Which of the following is least likely to be considered a security under the Securities Act of 1933?
General partnership interests.
Which one of the following is not exempted from federal antitrust regulation?
Major league baseball.
Spiffy Manufacturing plans to offer a new issue of voting stock to the investing public. Assuming that it properly takes advantage of an exemption from registration under the 1933 act, Spiffy
Must adhere to both federal antifraud rules and state law.
Dee is the owner of 12% of the shares of common stock of D&M Corporation that she acquired in Year 1. She is the treasurer and a director of D&M. The corporation registered its securities in Year 2 and made a public offering pursuant to the Securities Act of 1933. If Dee decides to sell part of her holdings in Year 9, the shares
Must be registered if Dee sells 50% of her shares through her broker to the public.
Able Corporation was charged with a violation of the Federal Trade Commission Act. Harp, an FTC examiner, concluded that Able had violated the Act and made adverse determinations on several issues. Able believes Harp has been arbitrary in several of the determinations and clearly incorrect in others. Able
Must exhaust the available administrative remedies before relief in court can be sought.
On May 1, Apel purchased 7% of Stork Corp.'s preferred stock traded on a national securities exchange. After the purchase, Apel owned 9% of the outstanding preferred stock. Stork is registered under the Securities Exchange Act of 1934. With respect to the purchase, Apel
Must file with the SEC, the issuer, and the national securities exchange information concerning the purpose of the acquisition.
Gould Machinery builds bulldozers. Prior to this year, it sold a substantial amount of equipment to Mace Contractors on credit. Mace recently went into bankruptcy. To protect its investment, Gould took over Mace. Erhart Contractors now complains that the acquisition harms its business, alleging that its business would have improved had Gould not entered the market as a competitor. Erhart can
Not recover damages under the antitrust laws.
Which of the following statements best describes how regulatory agencies of the U.S. government are restricted in the adoption of specific regulations?
Regulations must be consistent with standards established in the legislation that created the agency.
Gardener ordered an exotic plant by mail from an advertisement in a magazine. Seller received Gardener's check and order, but the plant was out of season. If the plant will not be available for shipment for 3 months but the seller deposited Gardener's check in its bank anyway,
Seller can send Gardener a letter explaining that the plant will not be available for delivery for 3 months.
The Administrative Procedure Act (APA) was enacted in 1946 as a response to criticism of the discretion and power that Congress had granted to administrative agencies. Its main function is to
Specify the procedures agencies must follow in making rules and establish standards for judicial review of agency action.
All of the following are criticisms generally made of federal regulatory agencies and policies except
Taxes imposed by agencies being too high.
In accordance with the Federal Register Act of 1935,
The Federal Register prints the names and addresses of all governmental agencies.
A constant tension between the desire for profits and productivity and the desire to protect the environment exists because
The cost of complying with environmental regulations are high
Super Sports, Inc., sells branded sporting goods and equipment throughout the United States. It sells to wholesalers, jobbers, and retailers who in turn sell the goods to their respective customers. The wholesalers and jobbers, who do not sell at retail, are charged lower prices than retailers but are required to purchase in larger quantities than retailers with the cost savings inherent in such purchases accounting for the lower prices. The retailers are all charged the same prices but receive discounts for quantity purchases based exclusively upon the cost savings resulting from such quantity purchases. Girard sues Super alleging an illegal price discrimination. Which defense will be most likely to prevail?
The discounts are functional.
Taso Limited Partnership intends to offer $400,000 of its limited partnership interests under Rule 504 of Regulation D of the Securities Act of 1933. These interests are registered under state law. Which of the following statements is true?
The exemption under Rule 504 is available to an issuer of limited partnership interests.
A person who desires to build a new major stationary source must first obtain a permit. Which of the following will not be a condition of obtaining such a permit in a state that must submit Part D of a state implementation plan?
The new source cannot be constructed in a "dirty air area.
Which of the following facts will result in an offering of securities being exempt from registration under the Securities Act of 1933?
The sale or offer to sell the securities is made by a person other than an issuer, underwriter, or dealer.
Government Business Machines (GBM) has greater than an 80% share of the sales of computers to local and state governments. GBM requires all purchasers of its computers also to purchase its proprietary operating system, called GOS. Furthermore, GBM government contracts require all application software and peripherals to be purchased from GBM. Which of the following is a true statement about this tying arrangement?
The test of whether a tying arrangement is illegal is essentially the same under the Sherman Act and the Clayton Act.
Gritney, Inc., manufactures and sells foibles in competition with about four other firms in the United States. It sells about 90% of the foibles sold in the Midwest, but only about 10% nationally. Gritney will probably be found
To have monopoly power, if the relevant market is determined to be the Midwest.
Just before Christmas, Willy received an unordered silk scarf in the mail from a manufacturer. Several days later, the scarf was followed by a bill and letter explaining that it was sent for Willy's convenience to use as a Christmas gift. Which of the following statements is correct concerning Willy's liability for payment?
Willy may keep and use the scarf without an obligation to pay for it.
The best description of an administrative agency is that it is a governmental board, commission, officer, bureau, or department
With the power to make rules and adjudicate disputes affecting private rights.
A television commercial depicts a set of false teeth dunked in a glass of bubbly water and then pulled out shining clean and white. In reality, the set of false teeth is not the same stained set that was put into the bubbly water. Is this commercial deceptive?
Yes, because the public is being misled as to the seller's objective proof of a product claim.
Market Data Corporation is required to file a registration statement with the Securities and Exchange Commission. This statement must contain
a description of securities being offered for sale.
The Environmental Protection Agency (EPA) wants Waste Disposal Company to produce certain records for review. The EPA can gain access to the records through
a subpoena
Hearth & Home Furniture store advertises bedroom suites at a "Special Low Price of $599." When Ilene tries to buy one of the suites, Jill, the salesperson, tells her that they are all sold and no more are obtainable. Jill adds that Hearth & Home has other bedroom suites available for as low as $2,599. This is
bait-and-switch advertising.
Bev is the chief executive officer of Chef Cafés Inc., which is required to file certain financial reports with the Securities and Exchange Commission (SEC). Under the Sarbanes-Oxley Act of 2002, Bev must
certify that the reports are complete and accurate.
Delta Water Company is subject to a decision by the Environmental Protection Agency. Delta appeals the decision, arguing that it is arbitrary and capricious. This could mean that the decision
changed the agency's prior policy without justification.
Persons who favor the creation of a federal agency to regulate the production of genetically modified agricultural products should concentrate their lobbying efforts on
congress
Components Assembly Corporation is a public company that is poised to issue securities that do not qualify for an exemption from registration. This means that the company must
file a registration statement with the SEC
Two Chinese firms, Wong Ltd. and Xiang Ltd., engage in a conspiracy to control the distribution of certain goods in global markets. This may violate U.S. antitrust laws
if the conspiracy has a substantial effect on U.S. commerce only.
Under the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA), if land is found to be contaminated, which of the following parties would be least likely to be liable for cleanup costs?
innocent landowner
Leo's application to Metro Bank for a credit card is denied on the basis of what Leo believes is an inaccurate credit report. Leo should
obtain his credit report and notify the reporting agency of inaccuracies.
The goal of securities regulation is to
prohibit deceptive and manipulative practices in the securities markets.
Solar Power Company wants to erect an array of solar panels on private land, for which a federal permit is required. For this action, an environmental impact statement is
required
Federal and state laws are aimed at protecting consumers from all of the following except
secured transactions
Debt Equity Inc., and its officers, directors, and employees, buy and sell securities based on financial research and analysis. Section 16(b) of the Securities Exchange Act of 1934 covers purchases and sales of securities involving
short-swing profits.
BioChem Corporation operates a hazardous waste storage facility. ChemCo Inc. buys BioChem before it is discovered that the firm's disposal practices violated CERCLA. With respect to these violations, Superfund is likely to impose on ChemCo
strict liability.
Which one of the following examples of corporate behavior would most clearly represent a violation of the Sherman Act?
submitting bid to government as same
Quik Mart sells groceries. Rite Price sells groceries and fills prescriptions. The party with the chief responsibility to prevent unsafe food and drugs from being sold is
the Food and Drug Administration.
With respect to antitrust violations, the Federal Trade Commission does not enforce
the Sherman Act.
Spectrum Paints Inc. is a public company whose shares are traded in the public securities markets. Under the Sarbanes-Oxley Act of 2002, the firm is subject to the direct corporate governance requirements of
the federal government
Bird Corp. made a $5 million exempt common stock offering under Rule 505 of Regulation D of the Securities Act of 1933. Thus, the shares were restricted securities. As the issuer of restricted securities, Bird must
the issuer must make reasonable effort to ensure that the purchasers are purchasing for their own account and not for resale.
The Food and Drug Administration (FDA) is an executive agency. As an executive agency, the FDA is subject to the authority of
the president.
The Food and Drug Administration (FDA) wants Pharma Inc. to produce certain records for review. Pharma need not reveal
trade secrets.
The National Park Service hires Outdoor Play Inc. to replace outdated playground equipment in a handful of national parks. For this action, an environmental impact statement is most likely
unnecessary because the action is not "major."
