ABC Regulatory Compliance & Standards 2 — Questions and Answers
Question 1: Under the Sarbanes-Oxley Act, which communication responsibility falls on public company executives regarding financial disclosures?
- Delegate all disclosures to the PR department
- Personally certify the accuracy of financial reports (Correct answer)
- Limit communication to annual reports only
- Route all disclosures through legal counsel without executive sign-off
Correct answer: Personally certify the accuracy of financial reports
SOX Section 302 requires CEOs and CFOs to personally certify the accuracy and completeness of financial disclosures filed with the SEC.
Question 2: A communicator drafting a press release for a publicly traded company discovers material non-public information. The correct action is to:
- Release the information immediately to prevent insider trading
- Consult legal counsel and delay release until proper disclosure procedures are followed (Correct answer)
- Share the information only with financial analysts
- Include the information in the next quarterly report without a separate release
Correct answer: Consult legal counsel and delay release until proper disclosure procedures are followed
Material non-public information must be handled through proper Regulation FD and SEC disclosure procedures before public release.
Question 3: Which federal law most directly governs how organizations communicate about consumer privacy practices?
- The Sherman Antitrust Act
- The Federal Trade Commission Act (Correct answer)
- The Communications Act of 1934
- The Lanham Act
Correct answer: The Federal Trade Commission Act
The FTC Act prohibits unfair or deceptive acts, giving the FTC authority to enforce truthful privacy policy communications.
Question 4: When communicating about a product recall, which regulatory body's guidelines should a PR professional follow for consumer product safety issues?
- SEC
- CPSC (Correct answer)
- FCC
- OSHA
Correct answer: CPSC
The Consumer Product Safety Commission (CPSC) sets recall communication requirements including timing, content, and distribution channels.
Question 5: The concept of 'reasonable accommodation' in workplace communications is most closely tied to which law?
- The National Labor Relations Act
- The Americans with Disabilities Act (Correct answer)
- The Fair Labor Standards Act
- The Occupational Safety and Health Act
Correct answer: The Americans with Disabilities Act
The ADA requires employers to communicate and provide reasonable accommodations for employees with disabilities.
Question 6: A company spokesperson is asked about a competitor's product during a press conference. Which legal doctrine is most relevant to how they should respond?
- Trade secret law
- Comparative advertising under the Lanham Act (Correct answer)
- RICO statutes
- The First Amendment's commercial speech doctrine
Correct answer: Comparative advertising under the Lanham Act
The Lanham Act governs comparative advertising, requiring that any comparisons be truthful and non-deceptive to avoid liability.
Question 7: In regulated industries, a 'quiet period' typically refers to:
- A media blackout during labor negotiations
- A restricted communication window before an IPO or earnings release (Correct answer)
- A mandatory silence period after a corporate crisis
- A pause in advertising campaigns during regulatory review
Correct answer: A restricted communication window before an IPO or earnings release
A quiet period restricts company communications before an IPO or earnings announcement to prevent influencing investor decisions.
ABC Regulatory Compliance & Standards 2
Under the Sarbanes-Oxley Act, which communication responsibility falls on public company executives regarding financial disclosures?