Investor Protection and Securities Transactions

This set of flashcards covers key concepts from the lecture on Investor Protection, including regulations, definitions of securities, and relevant legal cases.

The Business Judgment Rule protects directors from liability as long as they use __.

Due diligence.

Due diligence involves adequately investigating the __ of securities before purchasing them.

Material information.

Prior to the 1920s and 1930s, there was __ regulation on the sale of securities by the federal government.

No.

The Securities Act of 1933 requires __ of information to investors.

Disclosure.

An Initial Public Offering (IPO) is the first time a company sells its shares to the __.

Public.

The Securities Exchange Act of 1934 was enacted to prevent __ in subsequent trading of securities.

Fraud.

A derivatives security derives its value from the relationship with another __.

Asset.

A 'Put' contract option is a bet that a stock price will __.

Fall.

The Dodd-Frank Act was created to regulate __, derivatives, and abusive practices after the 2008 financial crisis.

Hedge funds.

Section 10(b) of the 1934 Act prohibits manipulative and __ devices in the buying or selling of securities.

Deceptive.

Insider trading is prohibited under Section 10(b) and Rule __ of the Securities Exchange Act.

10b-5.

A tipper is someone who discloses material __ information to another person.

Non-public.

Chiarella v. United States determined that a duty to disclose arises from a fiduciary relationship of __ and confidence.

Trust.

The SEC v. Texas Gulf Sulphur case focused on the use of __ information in trading shares.

Material.

Statutory insiders must disclose ownership and trading in company __.

Securities.

Short-swing profits are defined as profits made on trades occurring within __ of each other.

Six months.

State securities laws are often referred to as __ laws.

Blue-sky.