business law ch 18-22

horizontal restraints of trade

occurs when the businesses involved operate at the same level of the market and generally in the same market

prospectus

a document providing the legal offering of the sale of the security

insider trading

the buying and selling of stock by persons who have access to information not yet made public

vertical business relationships

Manufacturer of Product A ←→ Distributor of Product A ←→ Retailer of Product A ←→ Consumer of Product A

horizontal business relationships

Product A, Manufacturer X ←→ Product A, Manufacturer Y ←→ Product A, Manufacturer Z

investment advisor

a person who for compensation engages in the business of advising others... as to the advisability of investing in, purchasing, or selling securities

riparian water law

allow people who live along rivers and bodies of water the right to use water in reasonable amounts but requires them to allow water to flow downstream in usable form

debt instruments must specify

amount of the debt, length of the debt period, debt repayment method, rate of interest charged to the sum borrowed

Howey Test

an investment is a security security if it contains four basic elements: an investment of money, in a common enterprise, with an expectation of profits, generated by the efforts of persons other than the investors

Insider Trading Sanctions Act of 1984

can seek treble the amount gained or loss avoided as well as criminal penalties

Per Se Rule

certain business agreements or activities automatically are illegal if found to exist

exchanges of information

competitors share information about offers or pricing information from customers

vertical restraint of trade

concerns relationships between buyers and sellers, wholesalers and retailers

Commodity Control List

contains restricted goods, countries to which they cannot be sent, and the reasons for the restrictions

territorial restrictions

dividing the country or a state into territories

Clean Air Act of 1970

established federal authority to control air pollution and enforce standards across the country

Investment Company Act

gives the SEC control over the structure of investment companies

exemptions from security registration

government bonds, private placements, qualified institutional buyers, accredited investors, well-known season issuers, crowdfunding

North American Free Trade Agreement (NAFTA)

ied by the United States, Canada, and Mexico, it went into effect in 1994. It reduced or eliminated tariffs and trade barriers on most North American trade

Mail Order Rule

if a company sells merchandise by mail, it must ship the goods in the time stated in its ads

Chiarelli

if defendant is not a corporate insider, but just lucky to get advance info, not securities fraud to use that information

Insider Trading and Securities Fraud Enforcement Act of 1988

increased maximum fine to $1 million and prison term for 10 years for people ($5 for willful violations) and $25 million for corporate non-willful violations; also allowed up to 10% bounties for informants

international trade

involves the movement of goods, services, capital, and personnel around the world, often by multinational enterprises

Robinson-Patman Act

makes price discrimination, selling the same goods to different buyers at different prices illegal when it lessens competition or creates a monopoly

Dirks

must be manipulation or deception, which involves inherent unfairness, for it to qualify as insider trading

Rule of Reason

not as black and white; a court will look at the facts surrounding business practices before deciding whether they help or hurt competition

debt financing

occurs when a company incurs debt that has to be repaid to those who purchase it

proxies

permission given by a shareholder to another party to vote his shares in the manner he instructs

Foreign Corrupt Practices Act

prohibits U.S. companies and their agents from bribing foreign officials

Food, Drug, and Cosmetic Act of 1938

prohibits the sale of any drug until the FDA gives approval

Endangered Species Act of 1973

protects about 1250 recognized threatened and endangered species in the United States as well as their habitats

Superfund (CERCLA)

provides the authority to clean up abandoned hazardous sites

Investment Advisers Act

regulates brokers, dealers, persons who buy and sell securities for themselves and advisers, who charge fees for investment advice

Securities Act of 133

regulates the public offerings of securities when they are first sold and requires investors be given material information about new securities

Securities Exchange Act of 1934

regulates trading in existing securities and imposes disclosure requirements on corporations that have issued publicly held securities and regulates securities markets and professsionals

material information

relevant information an investor would want to know about a company (background, executives, plan of operations)

Resource Conservation and Recovery Act

requires generators, who create millions of tons of hazardous waste each year, to comply with EPA regulatory programs regarding transportation, storage, treatment, and disposal

Sarbanes Oxley Act

requires the CEO and CFO of large companies with publicly traded stock personally certify that financial reports made to the SEC comply with SEC rules and the information in the reports is accurate

Nutrition Labeling and Education Act

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

US import policy

restrictions are imposed to generate tariff revenue and protect domestic industries

US export policy

restrictions on exports can be imposed when sales may injure domestic industries, jeopardize national security, and conflict with national policy

Clean Water Act of 1972

sets pollution standards, water quality standards, requires permits for discharges, establishes special provisions for toxic chemicals and oil spills, and establishes grants and loans for publicly owned treatment works such as sewage treatment plants

Kids' Online Privacy Rule

the Children's Online Privacy Protection (COPPA) Rule requires website and service operators to obtain parental consent before collecting personal information about a child, including photos and IP addresses

consumer credit protection

truth in lending, fair credit billing, fair credit reporting, equal credit opportunity, fair debt collection practices

predatory pricing

trying to force a competitor out of a market

tender offers

when an acquiring company offers stock in the acquiring company, cash, or some combination in exchange for their story

price fixing

when firms sell the same product and agree to fix the price, there is a conspiracy that likely violates the Sherman Act

horizontal mergers

where two firms were competitors before they merged