79 - Ch. 1
Earnings at HIJ Corporation have been negative for 2 successive quarters. Three hedge funds, own 2%, 3% and 4% of the company, respectively. As activist investors, they have agreed to form a group to exert greater control over the company and change the course of its future direction. Which of the following statements is TRUE? AThe group is required to file Form 13F BThe group is required to file Form 3 CThis event does not trigger an SEC filing requirement DThe group is required to file Form 13D
A 13D filing is made within 10 days of a person, or group of persons, acquiring ownership of more than 5% of a company's equity. Since the three investors forming a group will own more than 5% of the equity, they are required to file Form 13D. A group is defined as persons agreeing to act together for the purpose of acquiring, holding, voting, or selling the equity securities of an issuer.
Moe Capital, The Larry Investment Fund, and Curly Capital Management each own 2% of the Fine Corporation, a Nasdaq Global Market Security. They are disappointed in the current management and want to form a group to have leverage with the issuer. Which of the following statements is TRUE? AThis event does not trigger an SEC filing requirement BThe group is required to file Form 8-K CThe group is required to file Form 13F DThe group is required to file Form 13D
A 13D filing is made within 10 days when a person, or group of persons, acquires ownership of more than 5% of a company's equity. Since the three investors forming a group will own more than 5% of the equity, they are required to file a 13D. A group is defined as persons agreeing to act together for the purpose of acquiring, holding, voting, or selling the equity securities of an issuer.
What information would NOT be found in a company's annual proxy statement? AThe name of the independent public accounting firm performing the audit BThe names of the independent directors CLast year's voting results on shareholder proposals DFinancial statements
A company's financial statements would be found in its annual 10-K filing or its quarterly 10-Q filings. (Note: A company publishes three 10-Qs and one 10-K a year.) The annual proxy statement contains the names of the members of the board of directors, executive compensation, ownership of securities by holders of five percent or more of the company's common stock (based on 13D and 13G filings), the name of the independent public accounting firm performing the audit, and other information related to any other matter that will be voted on at the annual shareholder meeting. Shareholder proposals will be presented with a supporting statement, and the BOD's response, either for or against. Sometimes the same shareholder proposal that was voted on at last year's meeting and the proxy will show the results of the vote.
An issuer is required to furnish an annual proxy statement to shareholders at least: 20 business days prior to the meeting B30 calendar days prior to the meeting 20 calendar days prior to the meeting D10 calendar days prior to the meeting
According to SEC Rule 14c-2, an issuer is required to furnish an annual proxy statement at least 20 calendar days prior to the meeting date. An exception to this rule is granted if the issuer sends shareholders a notice of Internet availability at least 40 days prior to the meeting date. The notice will identify to shareholders how they may obtain the proxy materials free of charge through a Web site.
A high risk investment strategy in which an investor purchases stocks which are selling at low price-to-earnings ratios, low price-to-book value ratios, and are from industries that are out-of-favor is BEST defined as: ADistressed investing BDeep value CRisk arbitrage DCredit arbitrage
Deep value investing refers to a high risk investment strategy in which an investor purchases stocks which are selling at low price-to-earnings ratio and/or low price-to-book value ratios, as well as from industries that are out-of-favor. These companies usually trade at extremely low valuations as compared to value investing. With value investing, the stocks are trading at lower, but not deep valuations to the market.
A potential buyer in an acquisition of a publicly traded corporation has hired your firm to compile a report detailing the equity ownership of investment companies in the target company. Which is the BEST source of information for your report? AADV B13F C13G D10-Q
Information on the largest shareholders of an SEC reporting company may be found in three places—a 13D or 13G filing, or a 10-K (annual report). A 13D filing is triggered when a person or group of persons acquires ownership exceeding 5% of a company's equity. (The filing is required within 10 days of the transaction.) Schedule 13G is an alternative to Schedule 13D. It is usually filed by institutional investors (such as an investment company) that have no intention to influence or control the issuer. Although a 10-K provides information on the largest shareholders, this information is not found in a 10-Q. In order to register as an investment adviser with the SEC, the applicant must file Part 1 and Part 2 of Form ADV with the SEC. Rule 13f-1 of the Securities Exchange Act of 1934 requires quarterly filings (13F) by institutional investment managers who exercise investment discretion over at least $100,000,000 in equity securities. This filing discloses its equity securities holdings.
Of the following types of issuers, which one is required to file a Form 10-K within 60 days? AA non-accelerated filer BA small reporting company CAn accelerated filer DA large accelerated filer
Public companies are required to file reports with the SEC, such as Forms 10-K and 10-Q. The required timing for the filing of these reports is based on the category of the filer. A Form 10-K must be filed by large accelerated filers within 60 days, by accelerated filers within 75 days, and by both non-accelerated filers and small reporting companies within 90 days.
An accelerated filer is defined as a company that has: AA market capitalization of a least $75 million BA public float of $700 million or more CA public float of at least $75 million, but less than $700 million DA company that has recently conducted an IPO and has less than $1 billion in revenue
Public companies are required to file reports with the SEC, such as Forms 10-K and 10-Q. The required timing for the filing of these reports is based on the category of the filer. The definitions of the different filers are similar to those that relate to the types of issuers when raising capital, such as a WKSI or seasoned issuer. A large accelerated filer has a public float of $700 million or more, has filed one annual report (Form 10-K), and has been subject to SEC reporting requirements for least 12 months. An accelerated filer has a public float of at least $75 million, but less than $700 million, has filed one annual report (Form 10-K), and has been subject to SEC reporting requirements for least 12 months. If the company's public float is less than $75 million, it is defined as a non-accelerated filer
Which of the following statements is TRUE with regard to SEC reporting companies and Form 10-Q? AForm 10-Q is filed annually by all reporting companies BForm 10-Q is filed three times per year and dated as of the fiscal quarter CCompanies file every three months DA reporting company must file whenever it needs to disclose material, nonpublic information
The 10-Q of an SEC reporting company is required to be filed after the end of each of the first three fiscal quarters of each fiscal year. The last quarter results are included in the annual results, reported through the company's 10-K. Form 10-Q states in its instructions that no report need be filed for the fourth quarter of any fiscal year.
Which TWO of the following statements are TRUE concerning the audit committee of the board of directors of a public company? All members of the audit committee must be members of the board of directors A majority of the members of the audit committee must be independent If the stock will be listed on the NYSE, at least one person on the audit committee needs to meet the definition of a financial expert If the stock will be listed on the NYSE, all of the members of the audit committee must be financial experts AI and IV BI and III CII and IV DII and III
There are several different rules concerning the audit committee of an SEC reporting company. According to the Sarbanes-Oxley Act (SARBOX), in general, each member of the audit committee must be a member of the BOD of the issuer and be independent. All of the members of this committee must be independent. According to Regulation S-K, the issuer must disclose: Whether the issuer has at least one audit committee financial expert serving on its audit committee, or Whether the issuer does not have an audit committee financial expert serving on its audit committee If the issuer has a financial expert on its audit committee, it must disclose the name. A financial expert is generally defined as someone who understands GAAP and financial statements, has audit experience, can evaluate financial statements, can understand internal controls over reporting systems, and understands the audit committee functions. According to the listing requirements of the NYSE and Nasdaq, an issuer must have at least one person on the audit committee who meets the definition of a financial expert. As a matter of practice, most reporting issuers have at least one financial expert serving on their audit committees.
All of the following statements are TRUE concerning a Subchapter S Corporation, EXCEPT: AA trust is permitted to be a shareholder BThere is a limit as to the number of shareholders allowed CAll shareholders must be U.S. citizens DA partnership is permitted to be a shareholder
Under Subchapter S of the Internal Revenue Code, corporations that elect to be taxed like partnerships are referred to as S Corporations. In order to qualify as an S Corporation, a corporation must meet the following requirements: It may have no more than 100 shareholders. All shareholders must be U.S. citizens or resident aliens. The shareholders must all be individuals, estates, or certain types of trusts. It must be a domestic corporation. The corporation may not be part of an affiliated group of corporations. The corporation may have only one class of stock outstanding. Partnerships may not be shareholders of an S Corporation.
Under which of the following circumstances is a preliminary proxy statement filed with the SEC? AStockholders' proposals BTo vote on a proposed transaction in which the issuer will receive cash to be purchased by another publicly traded company CThe ratification of a company's independent registered public accounting firm DTo elect directors as proposed by the board of directors
Under which of the following circumstances is a preliminary proxy statement filed with the SEC? AStockholders' proposals BTo vote on a proposed transaction in which the issuer will receive cash to be purchased by another publicly traded company CThe ratification of a company's independent registered public accounting firm DTo elect directors as proposed by the board of directors