Question

Meet the SEC: what does the SEC do? How does it impact the finance industry?

Who can bring lawsuits or criminal charges for violations of securities laws?

The differences among government enforcement, criminal charges, and shareholder litigation

What is the “Efficient Market Hypothesis?”

How did the Supreme Court define an “investment contract” in Howey?

What kinds of financial arrangements constitute “securities”?

What are the implications of being a security?

How do the securities laws balance investors’ need for information against issuers’ burden of disclosure?

Why is materiality important?

How did the Supreme Court define “material” in TSC Industries?

What did Basic v. Levinson add to the definition?

What is the “half-truth rule”?

What is the subject matter and structure of the Securities Act of 1933?

How are securities sold to the public?

What is the role of underwriters?

What are the anti-fraud provisions governing the issuance of securities?

• Who can be held liable for fraud in the issuance of securities?
• What is “joint and several” liability as compared with “proportional” liability”?
• What are rights of contribution and indemnification?
• What is the “due diligence” defense?
• How is a prospectus helpful in a securities fraud defense?

What is “Gun-Jumping”?   --- a “red herring”?

What securities are exempt from the Securities Act? Why?

What transactions are exempt from the Securities Act? Why?

What is the goal of the JOBS Act?

How do exemptions help small(er) businesses raise capital efficiently?

What limitations/requirements apply to the exemption for small offerings?

What is a “private placement”?

What limitations/requirements apply to private placements?

What is the subject matter and structure of the Securities Exchange Act of 1934?

How does the Exchange Act regulate issuers?

What are the disclosure requirements of the Exchange Act? (How) do they differ from Securities Act requirements?

What information is typically included in a securities registration statement?

--- in a prospectus?   -- in a periodic report? How do they differ?

What is an S-3 filer?

How are broker dealers regulated?

What is a self-regulatory regulation?

How does the SEC enforce governance of broker-dealers?

What are the duties of broker-dealers? Of register representatives?

How does the Exchange Act regulate securities market participants other than issuers?

How are investment companies regulated?

How is the regulation of investment companies different from other securities market participants?

How are investment advisers regulated?

How are investment advisers different from broker-dealers?

Why are credit rating agencies regulated?

Mutual funds and the Investment Company Act of 1940: What is a registered investment company? How does it differ from a “hedge fund” or “private equity fund”?

How the Investment Advisers Act of 1940 regulates the conduct of Investment Advisor.

Answer 1

1. The mission of the SEC is to protect investors, maintain fair, orderly, and efficient markets, and facilitate capital formation.
2. As the SEC regulates the securities markets and protects investors against mismanagement and fraud, this helps in encouraging more investments and help protect the stability of the financial services companies and the finance industry as a whole.
3. Difference between:

• Government enforcement is the process of ensuring compliance with laws, regulations, rules, standards, and social norms. Governments attempt to effectuate successful implementation of policies by enforcing laws and regulations.
• A Criminal Charge is a formal accusation made by a governmental authority (usually a public prosecutor or the police) asserting that somebody has committed a crime.
• Shareholder Litigations refers to legal proceedings brought against the company. It refers to the class actions lawsuits filed by stockholders of the seller.

4. The Efficient Market Hypothesis(EMH) is a hypothesis in financial economics that states that asset prices reflect all available information. A direct implication is that it is impossible to "beat the market" consistently on a risk-adjusted basis since market prices should only react to new information.