Question

While investigating the shares offered to you by your potential boss, you discover that the company you are considering working for is not registered as required under the Securities Act of 1933. How does this influence you as a potential employee and as a potential shareholder? Be sure to reference any applicable statutes or laws.

You know that accepting this job may eventually lead to a promotion into the role of the financial manager. As the potential financial manager, what federal and shareholder requirements would you need to be familiar with in order to ensure that you are being completely compliant?

Answer 1

A) The 1933 act provide for civil liability for damages arising from mistatements or ommisions in the registration statement . In addition the law provides for civil liability for mistatements or ommission in any offer or sale even though that security is not registered. Antifraud provision in the law makes it illegal to engage in fake practices regards this.

1933 Prohibhits buying or selling before filing of registration is done. SEC takes a board view of what constitutes an offer.

A person who acquires registration statement at the time it became effective contained an" untrue statement " may sue to recover difference between price paid and disposed. A Buyer have to show registration statement contained material mistatements that he lost money . In most of the cases buyer no need show the reference they have made.

B) Being a financial manager it is required to assured organisation followed all the constitutional requirements . Company should comply with federal and state requirements may be criminal or legal.

Financial managers should familiar with the above in order to comply with federal and shareholders requirements