COB 218 Lecture Notes - Lecture 22: Private Securities Litigation Reform Act, Securities Act Of 1933, Scienter

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3 Apr 2017
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Learning objectives (cont"d: what certification requirements does the sarbanes-oxley act impose on corporate executives? introduction. Securities are any instruments representing corporate ownership (stock) or debts (bonds). Sale and transfer of securities are regulated by federal and state statutes and government agencies: new sec regulations. Section 2(1) of the securities act contains broad definition of securities. The howey test: many types of securities. Can be interests in whiskey, cosmetics, worms, beavers, boats, etc. Section 5 provides a security must be registered. Corporation"s properties and business: management of the corporation, how the corporation intends to use proceeds of sale, any pending lawsuits or special risk factors. Certain types of securities are exempt from registration requirements. Resales and safe harbor rules: most securities can be resold without registration. Plaintiff knew about misrepresentation at time of stock purchase: defendant exercised due diligence in preparing registration. Provides for regulation and registration of securities exchanges, brokers, dealers, and national securities associations.

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