Quiz 37: Securities Regulation


Stronger or weaker case than S case: The second circuit found that S case foreclosed these liability claims. The court said that the lawyers were not making the statements themselves and that they were simply at work behind scenes. They would only be responsible for their own "articulated statement" or statements of others that they had explicitly adopted. According to law of section 10(b) - it prohibits fraud in connection with the purchase and sale of any security, whether or not the issuer is registered under the act 1934. Both the cases fall under the same law of section 10(b) and it is stronger case than S case.

Securities act: The S act states that, before buying or selling shares, an issuer has to register the shares with SEC and the shares should qualify for exemption. It is also important that when issuer registers shares, the SEC should not examine the quality of buying securities. The guiding principle of federal securities is that investors can make a reasoned decision on whether to buy or sell securities. If they have full and accurate information about a company and security it is selling.

The main principle of the federal securities laws is that investors should be given the opportunity to make reasoned decisions on whether to buy or sell securities if they have full and accurate information about a company and the security it is selling. Securities are transactions in which the buyer invests money in a common enterprise and expects to earn a profit predominantly from the efforts of others, which includes common stock. It is true that the issuer of a common stock would act unlawfully if it were to sell common stock without giving the investor a prospectus. Therefore , the answer (b) is correct.

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