>> Business Law and Ethics
1. Give five illustration of securities that are exempted from the registration provisions of the 1933 Act.
2. In the above case involving Donna, what is necessary for her to prove a Section 12(2) case involving misstatement of material facts in a prospectus?
3. Donna invests in Slick Co. stock. Donna seeks to recover damages when it is discovered that Slick's registration statement contains false information. What is required for Donna to recover for the false statements made by Slick?
4. Irv, a custodian at Gargantuan Corp., was dusting a corporate executive's desk one evening when he discovered and read an interesting report containing information that was not available to the investing public. The information was such that if it were available to the investing public, the price and value of gargantuan stock would soar. Irv informed his friend, Simone, of what he had read in the document. Simone then purchased 100 shares of gargantuan stock from Cletus, without telling Cletus the information given to her by Irv. When this information ultimately was made available to the investing public, the value of gargantuan stock indeed soared. Simone resold, at a substantial profit, the 100 shares she had purchased from Cletus. Cletus thereafter sued Simone in an attempt to recover the profit Simone had made. Simone denied any liability to Cletus, claiming that because she was not an director, officer. or employee of Gargantuan, she had done nothing wrong. Is Simone liable to Cletus? Why or why not?
5. Bill's broker strongly advised Bill to buy Glutton Co. stock. The broker does not tell Bill that his brokerage firm has taken a huge stake in the stock. Show Bill's case against the brokerage firm under Rule 10b-5 under the Securities Act of 1934.