CEP Legal & Regulatory Compliance 2

Question 1

Under Rule 10b5-1, a trading plan must be established when the insider is:

Accepted Answer

Not aware of any material nonpublic information

Answer

Rule 10b5-1 plans must be adopted when the insider does not possess material nonpublic information to provide an affirmative defense against insider trading allegations.

Question 2

Which SEC form must be filed within two business days of a Section 16 officer acquiring company equity securities?

Accepted Answer

Form 4

Answer

Form 4 must be filed within two business days of any change in a Section 16 insider's beneficial ownership of company equity securities.

Question 3

The short-swing profit rule under Section 16(b) applies to profits realized from a purchase and sale (or sale and purchase) of company securities within:

Accepted Answer

Six months

Answer

Section 16(b) requires disgorgement of profits from any purchase and sale, or sale and purchase, of company equity securities within any six-month period by covered insiders.

Question 4

Which Dodd-Frank Act provision requires companies to implement a clawback policy for executive compensation?

Accepted Answer

Section 954

Answer

Dodd-Frank Section 954 requires listed companies to adopt policies to recover incentive-based compensation from current and former executives following an accounting restatement.

Question 5

Under IRC Section 409A, which of the following is NOT a permissible payment trigger for deferred compensation?

Accepted Answer

Employee's request for early withdrawal

Answer

IRC Section 409A limits permissible distribution events to separation from service, disability, death, change in control, unforeseeable emergency, and a fixed date — not elective early withdrawals.

(CEP) Certified Equity Professional Practice Test

(CEP) Certified Equity Professional Practice Test

CEP Legal & Regulatory Compliance 2