Exam 3 Review: Bankruptcy Law, Securities Regulation, Antitrust, and Consumer Protection

Practice flashcards created to review key concepts from Chapters 36-39, focusing on Bankruptcy Law, Securities Regulation, Antitrust, and Consumer Protection.

What are the primary differences between Chapter 7 and Chapter 13 bankruptcy?

Chapter 7 is a liquidation bankruptcy for individuals with limited income, selling non-exempt assets to pay debts. Chapter 13 is a reorganization bankruptcy that allows individuals with regular income to create a repayment plan over three to five years.

What is the concept of an automatic stay in bankruptcy proceedings?

An automatic stay halts all collection activities, lawsuits, and foreclosures, providing temporary relief and protection to the debtor.

What is the role of a bankruptcy trustee?

The bankruptcy trustee oversees the bankruptcy process, reviews the debtor's petition, liquidates non-exempt assets in Chapter 7 cases, and ensures the repayment plan is followed in Chapter 13 cases.

What does a discharge in bankruptcy entail?

A discharge releases the debtor from personal liability for certain debts, wipes out those debts, and is granted at the end of the bankruptcy process, allowing the debtor a fresh start.

What is Chapter 11 bankruptcy?

Chapter 11 bankruptcy allows corporations to reorganize debts while continuing operations, involving the creation of a reorganization plan to restructure debts and improve financial stability.

What is the purpose of the Securities Act of 1933?

The purpose of the Securities Act of 1933 is to ensure transparency in financial statements, prevent fraud in the securities market, and require companies to register securities and provide accurate information to investors.

What is insider trading?

Insider trading involves buying or selling securities based on non-public, material information and is illegal due to the unfair advantage it provides and its potential to undermine market integrity.

What are the key functions of the Securities and Exchange Commission (SEC)?

The SEC regulates the securities industry, enforces securities laws, oversees securities exchanges, and protects investors by ensuring fair and efficient markets.

What does the Sherman Antitrust Act prohibit?

The Sherman Antitrust Act prohibits monopolistic practices and restraints of trade, preventing price-fixing, bid-rigging, and market allocation to promote fair competition.

What are horizontal and vertical restraints of trade?

Horizontal restraints involve agreements between competitors at the same level of the market, while vertical restraints involve agreements between entities at different levels of the market.

What is the role of the Federal Trade Commission (FTC)?

The FTC enforces antitrust laws, investigates and prosecutes unfair business practices, and promotes competition to protect consumers.

What are the main provisions of the Consumer Product Safety Act?

The Consumer Product Safety Act establishes safety standards for consumer products, mandates reporting of unsafe products, and empowers the CPSC to enforce regulations and recall dangerous products.

What is deceptive advertising?

Deceptive advertising involves misleading consumers through false or exaggerated claims and is regulated by the FTC.

What rights do consumers have under the Fair Credit Reporting Act?

Consumers have the right to access their credit reports, dispute inaccurate information, and receive notification of adverse actions based on credit reports.

What is the Consumer Financial Protection Bureau (CFPB)?

The CFPB protects consumers in the financial sector, enforces consumer protection laws, regulates financial products and services, and promotes fair and transparent practices.

What does 'caveat emptor' mean?

'Caveat emptor' is a Latin phrase meaning 'let the buyer beware,' indicating that buyers must be vigilant and check products or properties thoroughly before purchasing.

How might bankruptcy affect a buyer's ability to recover damages if the seller files for bankruptcy?

An automatic stay will halt the buyer's lawsuit; the buyer may need to file a claim in bankruptcy proceedings, and recovery depends on the type of bankruptcy filed.

What are the legal implications of insider trading?

Insider trading is illegal and undermines the integrity of the markets; violators may face fines, legal actions, and penalties.

What are some examples of anti-competitive practices?

Examples include price-fixing, bid-rigging, and market allocation, which are prohibited under antitrust laws.