chapter 17 financial securities

section 11

33 act

false registration statement

strict liability

section 12 a 1

33 act

selling without registration

strict liability

section 12 a 2

33 act

misleading prospectus

negligence

section 17 a 1

33 act

scheme to defraud

scienter

section 17 a 2

33 act

misstatements

negligence

section 17 a 3

33 act'

fraudulent conduct

negligence

section 17 b

33 act

anti touting

failure to disclose compensation

10b 5a

34 act

scheme to defraud

scientermisrepresentation of material facts

10b 5 b

34 act

misstatements

scienter

10b 5 c

34 act

fraudulent conduct

scienter

section 202 a 11

advisers act

definition of an adviser

advice, compensation, business

section 206 1

advisers act

fraud by adviser

scienter

section 206 2

advisers act

misleading conduct by adviser

negligene

33 act

regulates ipos to prevent fraud and get investors importan information. primary market

registration statement

detailed company information

prospectus

summary of company given to inmvestors

scienter

acted with intent or recklessness

negligence

should have known

34 act

regulates secondary market. created the sec

definition and types of insider trading

trading on MNPI

classical

missappropriated

tipper/tippee

classical insider trading

an insider trades on MNPI to their benefit

misappropriation theory of insider trading

a person misuses MNPI for their own benefit when they owed a fiduciary duty to whom the discovered it from.

tipper

gives MNPI

breaches duty

gets personal benefit from giving info, money, favor, give to friend/family

tippee

trades on MNPI

knows or should know it was improperly shared

scalping

recommend stock while secretly selling it

pump and dump

hype up stock, sell the stock, then the stock crashes

ponzi scheme

pay old investors with new investors money

investment advisers act

laws on who can be an investment advisor

doesn’t include lawyers, accountants, banks, teachers, brokers

IA registration

more than 100 million = sec

less than 100 million = state regulators

adv form disclosures

business information

fees

conflicts of interest

ia fiduciary duties

care = clients best interest

loyalty = disclose all conflicts of interest

sarbanes oxley act 2002

ensure accuracy and integrity of financial reporting of public companies

created the the PCAOBand implemented new accounting standards to prevent fraud.

SO act provision

auditor independence

• no consulting and auditing

• rotate every 5 years

financial reporting

• ceo and cfo must clarify statements

• internal controls tested and protected

whistleblower protection

• empoyees protected when reporting misconduct