LEGL 2700 Epstein Unit 4 Exam Guide Questions and Answers 100%VERIFIED
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Course
LEGL 2700
Institution
LEGL 2700
What classifies broadly as a "security" for the purposes of federal regulation? -Correct Answer Any interest or instrument that offers the right to subscribe to purchase stock, bond, or any certificate of interest.
Supreme Court says when one person invests money and looks to others to manage t...
LEGL 2700 Epstein Unit 4 Exam Guide
Questions and Answers 100%VERIFIED
2024-2025
What classifies broadly as a "security" for the purposes of federal regulation? -Correct
Answer ✔Any interest or instrument that offers the right to subscribe to purchase stock,
bond, or any certificate of interest.
Supreme Court says when one person invests money and looks to others to manage
the money for profit.
Who oversees security at the federal level? -Correct Answer ✔Securities and Exchange
Commissions (SEC):
- Responsible for administering the federal securities laws
Possess quasi-legislative, quasi-executive, and quasi-judicial powers
What is the Securities Act of 1933? -Correct Answer ✔Applies to the initial sale of the
security.
Requires the disclosure of information to the potential investors.
Information must be true and not misleading.
Penalties for violating Securities Act of 1933? -Correct Answer ✔Criminal Punishment,
Civil liability, Equitable remedy of an injunction
What is the Securities Exchange Act of 1934? -Correct Answer ✔Regulates transfers of
securities AFTER the initial sale
Created the Securities and Exchange Commission (SEC)
Illegal to sell unregistered securities on national exchange
Registration requires filing prescribed forms with stock exchange and SEC
What are the phases of going public? -Correct Answer ✔Prefiling Period, Waiting
Period, Posteffective Period
LEGL 2700 Epstein Unit 4
, LEGL 2700 Epstein Unit 4
Prefiling Period -Correct Answer ✔Legal to engage in preliminary negotiations and
agreements with underwriters
Illegal to sell the securities
Waiting Period -Correct Answer ✔Generally 20 days to allow SEC to review
Still illegal to sell securities
Not illegal to solicit offers, just can't accept them yet
Posteffective Period -Correct Answer ✔Sales can commence
What documents are required in going public? -Correct Answer ✔Registration
Statement and Prospectus
Registration Statement -Correct Answer ✔Detailed disclosure of financial information
about the issuer and controlling individuals
Prospectus -Correct Answer ✔Contains financial information related to issuer and
controlling persons:
- Provided to interested investor
- Just conform to statutory requirements (does not mean it is a good investment)
What players are involved in going public? -Correct Answer ✔Issuer, Underwriter, Seller
Issuer -Correct Answer ✔Individual or business organization offering a security for sale
to the public
Underwriter -Correct Answer ✔Anyone who participates in the original distribution of
securities
Sells securities for issuer or guarantees the sale (generally the larger investment
bankers)
Seller -Correct Answer ✔Anyone who contracts with a purchaser causing the purchase
to occur
Who is an insider? -Correct Answer ✔Officer, Director, and large share owners
- More than 10% of the company
- Special disclosure requirements
What is inside information? -Correct Answer ✔Any information about a company's
strategic and financial plans or current operations obtained from "inside" the company
(information not otherwise available to the public).
LEGL 2700 Epstein Unit 4
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