ETH/321T: Ethical And Legal Topics In Business - Week 5 Apply

Chloe has her own office where she generates investment advice for companies. She is compensated for her advice. Which of the following is false?

?? Chloe does not have to be a registered adviser if she doesn't have authority to make investment choices for her clients.

Bekah is an adviser for the company Vicoltech, which deals heavily in investments. Bekah also advises several other clients in her state, but no clients outside of her state. Before the Dodd-Frank Act was passed, Bekah was exempt from registration and reporting requirements with the SEC. When the Dodd-Frank Act was passed:

Bekah was still exempt from the SEC's reporting requirements.

Blinkorp is selling toys to retailers across the nation. Depending on the season, the company may make its toys with either higher-cost domestic plastics or lower-cost foreign plastics. The retailers who purchase from Blinkorp complain about the different prices caused by the differently-priced materials. Which of the following is true?

Blinkorp is justified in charging different prices because of the differing production costs.

Which of the following places the events in the correct order?

Concept release; Rule proposal; Public comment period; Amendment of rule proposal; Rule adoption

Identify the trade-restraining practice that this example demonstrates. Two retailers decide that they will both sell no more than 100 premium TVs per month in order to maintain the quality image of the TVs.

Controlling output

Government agencies generally have power to do all but which of the following?

Create a new agency in order to address important goals under the mandate of the law which created the agency.

Identify the trade-restraining practice that this example demonstrates. Company A and Company B both work in the candy industry. They agree that Company A will only sell chocolate to Company C and Company B will only sell fruit candies to Company C.

Division of markets

Flippatech is a home furnishings manufacturer. It wants to form a merger with SleepzCorp, another home furnishings manufacturer. This would be a __________ merger.

Horizontal

Nation A has a contract with Nation B, which it breaks. The International Court of Justice is asked to offer a decision resolving the matter. Which of the following is false?

ICJ cannot deviate from similar decisions it has made on contract breaches before.

Identify the trade-restraining practice that this example demonstrates. The CEOs of two pharmaceutical companies are having lunch. They discuss the unfair costs of ordering from a manufacturer that supplies to both companies. The CEOs decide that they will no longer work with the unfair pricing of the manufacturer.

Illegal boycott

For the scenario below, determine the legality of the company's actions. Ioncorp sells cabinets nationwide to the furniture company Blinkorp. It makes an agreement that Blinkorp will only sell Ioncorp cabinets in its warehouses.

Illegal, depending on impact

Horace is trying to start a business. He knows several accredited investors who he knows will help him jumpstart his business. What constraints on investments for new businesses apply here?

Investors may invest a combined $50 million within a 12-month period.

Wendy wants to start a business. She knows many unaccredited investors who she knows will help her jumpstart her business. What constraints on investments for new businesses apply here?

Investors may invest no more than $1 million combined for the first year of the business.

Bernie just started a business and is trying to raise capital. He has both accredited and non-accredited investors investing in the company. What constraints on investments for new businesses apply here?

Investors' allowable investment depends on the accredited or non-accredited status.

Kathleen works for an accounting firm, Securate, as an auditor. Kathleen's firm provides many services including auditing services, investment consulting, and tax assistance. Kathleen is working on an audit for a company that Securate also does consulting for. Which of the following is true?

Kathleen may not assist in consulting for the company.

For the scenario below, determine the legality of the company's actions. Lilcorp manufactures budget speaker systems for Bigcorp. It arranges an agreement wherein Bigcorp may not charge more than $300 for a speaker system.

Legal

Millcorp sells wetsuits for deep sea divers. It recently engineered a new material for its wetsuits to better hold in the wearer's body heat. After a close encounter with a shark, a customer discovers that the new material protects against shark bites - an unintended benefit that Millcorp was not aware of. Soon after, Millcorp's sales explode and it achieves 90% market share in diver wetsuits. Which of the following best describes this situation?

Millcorp has a lawful innocent acquisition of a monopoly.

For the scenario below, determine the legality of the company's actions. Guncorp is selling rifles to a retailer Sportsacorp. In order for Sportsacorp to purchase a shipment of rifles, Guncorp requires that Sportsacorp also purchase a shipment of pistols.

NOT Impossible to determine legality

Determine the legality of the transaction. Tichatech is trying to pierce the global marketplace. When the CEO meets with a foreign prime minister, he offers him a vacation package to show his goodwill toward the country.

NOT Legal or illegal, depending on the purpose ??Illegal bribe

Yittercorp regularly trades in securities on a national exchange. The company is a widely-held corporation with 600 shareholders and $15 million in assets. Which of the following is true concerning the company's requirement to report to the SEC?

NOT Not required to report information to the SEC.

For the scenario below, determine the legality of the company's actions. Wreckorp wants to maintain an exclusivity image for its product line of sports equipment. It limits its distribution to 100 stores in each region.

NOT Strictly Legal

Gilcorp wants to increase its profitability. It tries to gain new customers by offering a cash bonus to customers who switch to its service from another company. Which of the following is true of this action?

NOT This may be illegal under the rule of reason.

Millitech is a sports equipment manufacturer. It wants to form a merger with an athletic wear company. This would be a __________ merger.

NOT Vertical

Identify the trade-restraining practice that this example demonstrates. Company A and Company B discuss average industry prices.

No illegal practice

Jewelcorp just began trading securities. The company is a closely-held corporation that is not trading stock on a national securities exchange. It has several dozen shareholders and $9 million in assets. Which of the following is true concerning the company's requirement to report to the SEC?

Not required to report information to the SEC.

Fancorp regularly trades in securities on a national exchange.Which of the following is true concerning the company's requirement to report to the SEC?

Required to report major business developments and must file annual and quarterly financial reports.

Nation A has a political dispute with Nation B. The nations are at odds, but they agree to let a mediator hear the dispute. Both are members of the UN. Which group would hear and decide on the nations' dispute?

The International Court of Justice

Nation A has expansive manufacturing capabilities, and, therefore, its economy focuses on selling goods to other countries. Country B buys goods from Country A but can't pay for the goods until it makes money from its own exports. It would look to _______ for assistance.

The International Monetary Fund

A government agency which administers rules concerning clean housing projects wants to specify and explain the language it uses to communicate with the public and enforce its statutes. Which of the following is true?

The agency does not need to invite public opinion on the information it will post.

Gillcore is about to go public and begin selling securities. As a new public company, what steps must Gillcore take in order to stay in line with the requirements of the Securities Act?

The company's obligations depend on what type of company it is and what type of securities it is offering.

Luanicorp wants to increase its profitability. It agrees with another company, Wescorp, to divide the market so that all customers north of a state line must come to one company for services, and all customers south of the state line must go to the other. The companies will then be free the deal with their customers as they wish. Which of the following is true of this situation?

This is illegal per se.

Decide the legality of the company's decision or action in the following situation: Vericorp wants to increase its profitability. It rearranges its distribution services so that it can serve customers in certain areas better, while leaving other areas where competitors are stronger unattended. The company makes no agreement with a competitor in doing so. Which of the following is true of this action?

This may be illegal under the rule of reason.

Funtech is a toy manufacturer. It wants to form a merger with one of the toy stores that buys its toys. This would be a __________ merger.

Vertical