Question

Compliance

A. 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.

B. 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. Securities Act of 1933 has 2 main goals which are as follows:

*To require that investors receive financial and other significant information concerning securities being offered to public sale and

*To prohibit deceit, misrepresentations, and other fraud in the sale of securities.

To attain these goals, SEC requires the companies to disclose material financial information through registration of securities which enables the investors to take informed purchase decisions.

The unregistered securities are known as restricted securities. There are so many restrictions imposed on the public sale of these securities by Rule 144. Hence, it is inadvisable to acquire those securities since it affects the liquidity.

B. For being completely compliant as a potential financial manager, I would need to be familiar with the rules governing the preparation and presentation of financial statements, laws applicable to the company such as Sarbanes-Oxley Act, Securities Act, 1933 and the like. I would also need to familiarize myself with all the filing requirements, the forms and applicable tax laws.