Worksheet 28.2: The Securities Exchange Act of 1934

2. What is a major difference between the Securities Act of 1933 and the Securities Exchange Act of 1934?

a. The 1933 act is a one-time disclosure law, whereas the 1934 act provides for continuous periodic disclosures by publicly held corporations.

5. Insider trading involves individuals who are:

a. insiders within publicly traded companies, including officers, directors, and majority shareholders.

1. The 1934 Securities Exchange Act provides for the regulation and registration of securities exchanges, brokers, dealers, and national securities associations, such as the National Association of Securities Dealers (NASD).

true

3. The Securities Exchange Act applies to companies that have assets in excess of ____ and five hundred or more shareholders.

$10 million

6. Under which theories may outsiders be held liable for insider trading? Choose two:

b. Misappropriation theory c. Tipper/tippee theory

9. Under which sections and rules can private parties sue violators? Choose two:

b. Rule 10b-5 e. Section 10(b)

7. Section 16(b) of the Securities Exchange Act of 1934 provides for the:

b. recapture by a corporation of short-swing profits resulting from insider trading.

8. Liability under Section 16(b) is strict liability, which means that:

c. neither scienter nor negligence is required.

4. SEC Rule 10b-5 applies only to cases that involve the trading of securities on organized exchanges, such as the New York Stock Exchange.

false

10. When a violation of Section 16(b) occurs, a corporation can bring an action to recover the short-swing profits.

true