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Q:
Vertical price fixing is also called:
A.Resale price maintenance.
B.Predatory maintenance.
C.Linear price fixing.
D.Express price fixing.
Q:
An individual found guilty of a crime under the Sherman Act may be sentenced to:
I. Up to ten years in prison.
II. Up to $1 million in fines.
III. Up to $10 million in fines.
A.I.
B.II.
C.I and II.
D.I and III.
Q:
When a product is sold only on condition that the buyer also purchases a second different product, the transaction is called a/an:
A.Reciprocal buying agreement.
B.Reciprocal selling agreement.
C.Reciprocal dealing agreement.
D.Tying agreement.
Q:
The First Amendment was the basis for recognition of the:
A.Noerr-Pennington doctrine.
B.Parker v. Brown doctrine.
C.Wheeler-Lea amendment.
D.Celler-Kefauver amendment.
Q:
Mere possession of monopoly power:
A.Violates Section 1 of the Sherman Act.
B.Violates Section 2 of the Sherman Act.
C.Violates the Clayton Act.
D.Is not a violation.
Q:
The University of Dover and Dover University are bitter cross town rivals. They compete in everything from sports to academics. The schools, because of shrinking enrollment, make an agreement to give all incoming students free tuition for one semester before raising the existing rates the following semester. This action would be considered:
A.A horizontal agreement in violation of the Sherman Act.
B.A vertical agreement in violation of the Sherman Act.
C.A tying agreement in violation of the Clayton Act.
D.A reciprocal dealing agreement violating the Clayton Act.
Q:
The most conspicuous form of predatory pricing is called:
A.Master-line cases.
B.Primary-line cases.
C.Secondary-line cases.
D.Tertiary-line cases.
Q:
Civil enforcement powers regarding federal antitrust matters belongs to:
I. FTC.
II. Department of Justice.
III. Treasury Department.
A.I and II.
B.I and III.
C.II and III.
D.II only.
Q:
The law firm of Smith, Brown and Jones has just held a meeting in which they have decided that all fees charged by the partners will be $500 per hour with no exceptions. They also set nonnegotiable fees for such things as preparation of wills, real estate settlements and other types of standard types of cases. Smith, Brown and Jones:
A.Are guilty of horizontal price fixing under the Sherman Act.
B.Are guilty of vertical price fixing under the Sherman Act.
C.Are guilty of predatory pricing under the Sherman Act.
D.Have broken no laws.
Q:
The Celler-Kefauver amendment that plugged the stock versus asset loophole in the Clayton Act applies to:
I. Corporations.
II. Partnerships.
III. Sole proprietorships.
A.I only.
B.I and II.
C.II and III.
D.I, II and III.
Q:
The Colgate Doctrine allows:
A.Manufacturers to set a price and refuse to deal with those that won't comply.
B.A franchisor to require that franchisees purchase all of its equipment and inventory from them.
C.The FTC to regulate unfair and deceptive acts or practices in commerce.
D.Natural monopolies to exist outside of Sherman Act jurisdiction.
Q:
The Clayton Act:
A.Amends the Sherman Act.
B.Replaces the Sherman Act.
C.Repeals the Sherman Act.
D.Rescinds the Sherman Act.
Q:
Interpreting the Robinson-Patman Act in Volvo Trucks North America, Inc. v. Reeder-Simco GMC, Inc., the court described three categories of competitive injury. Which of the following is not one of these categories?
A.Primary-line.
B.Secondary-line.
C.Straight-line.
D.Tertiary-line.
Q:
In State Oil Company v. Khan, the court examined the issue of vertical maximum price fixing and said:
A.All contracts or conspiracies in restraint of trade are per se unlawful.
B.All contracts or conspiracies in restraint of trade are per se lawful.
C.All contracts or conspiracies in restraint of trade should be evaluated under the rule of reason.
D.The Sherman Act prohibits conspiracies in restraint of trade but does not address illegal contracts.
Q:
The purpose of the Sherman Act was to:
A.Legalize monopolies.
B.Preserve competition.
C.Create trusts.
D.Restrict competition.
Q:
The person who holds legal title to trust property for the benefit of another is the:
A.Beneficiary.
B.Trustor.
C.Trustee.
D.Benefactor.
Q:
Private parties may bring criminal suits seeking monetary damages or injunction as a means of enforcing antitrust laws.
Q:
Concerted activities are illegal per se.
Q:
Section 2 of the Sherman Act regulates monopolies after they are formed but does not regulate mere attempts to monopolize.
Q:
Since 1997, over 90% of the fines imposed by the U.S. Antitrust Division relate to the activities of international cartels.
Q:
The Federal Trade Commission is tasked with determining whether unfair methods of competition exist but the Commission is not empowered to issue informal legal requirements in the form of trade rules and guides.
Q:
The Federal Trade Commission Act was written without a specific definition of what constituted "unfair methods of competition" to allow the FTC to determine whether it existed on a case by case basis.
Q:
The primary method of legally controlling the retail price is for a manufacturer to announce its prices and refuse to deal with those who fail to comply.
Q:
Horizontal price fixing occurs when manufacturers attempt to set the ultimate retail price for their products.
Q:
Agreements between competitors relating to the price to be charged for a product or service are in violation of the Sherman Act, if those agreements threaten free competition.
Q:
Alaska, when acting in its sovereign capacity, is exempt from federal antitrust laws.
Q:
Economists and politicians generally agree that vertical price fixing should be illegal per se.
Q:
Defendants often use a plea of nolo contendere in civil actions to avoid the use of evidence from the trial being used in the criminal case.
Q:
The test of reasonableness asks whether challenged contracts or acts are unreasonably restrictive of competitive conditions.
Q:
Mere possession of monopoly power is not a violation of the Sherman Act.
Q:
The per se rule makes price fixing illegal when it results in higher prices but doesn't apply to agreements to lower prices.
Q:
If an action is determined to be illegal per se, the courts are not required to apply the rule of reason to analyze the case further.
Q:
An express agreement is not required to create a contract in restraint of trade.
Q:
The Federal Trade Commission is an independent administrative agency charged with keeping competition free and fair through the enforcement of the Sherman Act.
Q:
According to the per se rule, price fixing is illegal only when the parties have control of the market.
Q:
A trust is a fiduciary relationship in which the trustee holds equitable title and the beneficiaries hold legal title to the trust property.
Q:
When is the use of nonpublic information not considered a violation of the Security Exchange Act of 1934 provisions?
Q:
What must an expert prove to successfully present the defense of due diligence?
Q:
What are the three different forms of registration that apply to a state's application of blue sky laws?
Q:
What was the purpose of the Private Securities Litigation Reform Act of 1995 and name some of the acts provisions?
Q:
What are the three questions that a court will seek to answer when making a determination as to whether something is a security?
Q:
What are the four most common exemptions from blue sky laws that have been identified?
Q:
What are the primary provisions of the Sarbanes-Oxley Act?
Q:
Under Sarbanes-Oxley, what types of services are auditing firms prohibited from providing to companies?
Q:
What are tombstone ads and when do they occur?
Q:
When is a prospectus issued, what is its purpose and what has the SEC specified as requirements to be contained in the prospectus?
Q:
The Insider Trading and Securities Fraud Enforcement Act provides civil penalties for profits gained with nonpublic information of:A.Incarceration.B.Return of illegal profits gained.C.Recovery of double damages.D.Recovery of triple damages.
Q:
In Securities and Exchange Commission v. Edwards, the court analyzed the definition of a security and concluded:
A.An investment contract, by definition, cannot be considered a security.
B.A security may feature either a fixed or variable rate of return.
C.A security is an investment of money in a common enterprise with variable rate profits to come solely from the efforts of others.
D.A contractual entitlement to a fixed return cannot be considered a security.
Q:
When an insider buys and sells company stock within a six- month period it is called:
A.Half-step profits.
B.Short-term profits.
C.Short-swing profits.
D.Home-run profits.
Q:
A person who learns of nonpublic information from an insider is called a:
A.Tippee.
B.Tipper.
C.Tipster.
D.Tipstee.
Q:
"Blowing the Whistle on Sarbox" a Wall Street Journal article published in August of 2007, reported that of the approximately 1000 whistle blower claims filed under Sarbanes-Oxley, ________ were initially found to have merit and ________ remained winning claims after a full evidentiary hearing.
A.17; 6.
B.107; 60.
C.170; 66.
D.770; 600.
Q:
Which of the following is not an insider:
A.An owner of 10% or more of any security.
B.An officer of the issuing company.
C.A director of the issuing company.
D.An SEC employee.
Q:
The damages of a defrauded purchaser of securities:
A.Are measured at the time of purchase.
B.Include a punitive amount to discourage further fraud.
C.Are measured at the time the fraud is discovered.
D.Are considered a 'sunk cost' and are not recoverable.
Q:
The secondary transfer of securities is regulated by the:
A.Securities Act of 1933.
B.Securities Exchange Act of 1934.
C.Fairness in Trade Act of 1942.
D.Consumer Protection Act of 1939.
Q:
Under Sarbanes-Oxley, auditors are required to preserve audit records for:
A.Three years.
B.Five years.
C.Seven years.
D.Nine years.
Q:
The regulation of securities began:
A.To help the government more accurately tax income.
B.To limit foreign investment in the United States.
C.To help the United States overcome the Great Depression of the 1930's.
D.To expand the ability of the government to control the supply of money.
Q:
The definition of 'security' includes:
A.Stocks.
B.Bonds.
C.Investment contracts.
D.All of the above.
Q:
The Insider Trading and Securities Fraud Enforcement Act provides that suits alleging illegal use of nonpublic information may be filed up to ________ after the wrongful transaction.
A.6 months.
B.1 year.
C.3 years.
D.5 years.
Q:
That a person should be considered to be a temporary insider if that person conveys nonpublic information that was to have been kept confidential has become known as the:
A.Quasi-insider theory.
B.Implied-insider theory.
C.Appropriation theory.
D.Misappropriation theory.
Q:
Rule 10b-5 of the 1934 Act is violated when:
A.One fails to correct a misleading impression left by previous statements.
B.There is silence when there is a duty to speak that results in deception.
C.There is a failure to state material facts.
D.All of the above.
Q:
When determining insider trading liability, because the SEC cannot determine for certain when nonpublic information is improperly used, there is a presumption that any profit made within a ________ time period is illegal.
A.1 month.
B.3 month.
C.6 month.
D.1 year.
Q:
Tombstone ads are:
A.Solicitations made during the waiting period.
B.Notices filed during the posteffective period announcing that the sale of securities has ended.
C.Announcements issued by the SEC warning potential investors that a company is being investigated for fraud.
D.Feedback from the SEC requiring additional information or a clarification of supplied information needed to complete a filed registration statement.
Q:
Under the 1933 Act, proof of intentional violation is usually required to impose:
I. Criminal sanctions
II. Civil sanctions
III. Equitable (injunctive) sanctions
A.I only.
B.I and II.
C.I and III.
D.I, II and III.
Q:
The SEC's right to conduct investigations is based on:
A.Their quasi-executive power.
B.Their quasi-legislative power.
C.Their quasi-judicial power.
D.An executive order.
Q:
In United States v. O'Hagan, O'Hagan was charged under the misappropriation theory with insider trading due to a stock profit made directly attributable to his relationship with a firm representing the purchaser of a tender offer for another corporation's stock. The court concluded each of the following except:
A.Full disclosure negates liability under the misappropriation theory.
B.Using nonpublic information is a "deceptive device" per § 10(b)
C.One can be guilty under the misappropriation theory if they are a fiduciary or if not a fiduciary, they have been entrusted with access to confidential information.
D.O'Hagan would not be liable had he represented the target of the tender offer but is guilty because he represented the bidder.
Q:
The Securities Enforcement Remedies Act:
A.Allows for the prohibition of an individuals service as an officer or director of a business organization.
B.Created the SEC.
C.Changes membership requirements of corporate audit committees.
D.Requires proof of criminal violation for individual and organizational fines to be imposed.
Q:
According to the 1933 Act, which of the following is considered legal during the prefiling period?
A.Selling a covered security.
B.Negotiations and agreements with underwriters.
C.Offering to sell a covered security.
D.Offering to buy a covered security.
Q:
According to the 1933 Act, which of the following is illegal during the waiting period?
A.Soliciting buyers for a company's securities.
B.Receiving offers to buy a company's securities.
C.Selling a company's securities as long as the money is escrowed and returned if the filing is turned down.
D.All of the above are illegal.
Q:
The registration process waiting period typically lasts:
A.10 days.
B.20 days.
C.30 days.
D.45 days.
Q:
The Uniform Securities Act created:
A.Registration by coordination
B.Registration by notification.
C.Registration by qualification.
D.Registration by pronouncement.
Q:
The Private Securities Litigation Reform Act mandated that:
A.The SEC could not pursue claims against third parties not directly responsible for a securities law violation.
B.Only the SEC could pursue claims against third parties not directly responsible for a securities law violation.
C.The PCAOB was given the authority to decide whether third parties not directly responsible for a securities law violation were never-the-less involved so closely to the violation that they could have claims pursued against.
D.Private plaintiffs who suffered injury could maintain private causes of action against third parties not directly responsible for a securities law violation.
Q:
The 1933 Act provides that if the person acquiring the security does so after the issuer has made generally available an earnings statement covering at least ________ after the effective date of the registration statement, then the person must prove reliance on the registration statement.
A.3 months.
B.6 months.
C.1 year.
D.2 years.
Q:
Due diligence requires that an expert prove that a ________ investigation of the financial statements of the issuer and controlling persons was conducted.
A.Strict.
B.Open.
C.Public.
D.Reasonable.
Q:
Plaintiffs suing under Rule 10b-5 of the 1934 Act are entitled to:
I. Actual damages
II. Consequential damages
III. Punitive damages
A.I and II.
B.I and III.
C.II and III.
D.I, II and III.
Q:
Under the 1934 Act, an individual found guilty of filing false or misleading documents with the SEC may be imprisoned up to:
A.5 years.
B.10 years.
C.15 years.
D.20 years.
Q:
Under the 1934 Act, a business organization found guilty of filing false or misleading documents with the SEC may be fined up to:
A.$1,000,000.
B.$5,000,000.
C.$25,000,000.
D.$50,000,000.
Q:
A prospectus is filed during the:
A.Prefiling period.
B.Waiting period.
C.Pre-effective period.
D.Posteffective period.
Q:
An insider is any person who owns ________ or more of a security.
A.5%.
B.10%.
C.15%.
D.20%.
Q:
The Public Company Accounting Oversight Board members are appointed by:
A.The President.
B.The Senate.
C.The SEC.
D.The full Congress.
Q:
Prohibitions against insiders from engaging in short swing profits are enforced by:
I. The SEC
II. Issuers of the security
III. Persons who own a security of the issuer
A.I.
B.I and II.
C.I and III.
D.II and III.