Legal Aspects & Regulatory Compliance Flashcards

Under the Uniform Commercial Code (UCC), which Article governs the sale of goods and is most relevant to commercial fraud schemes?

Answer: Article 2

UCC Article 2 governs contracts for the sale of goods and is central to commercial fraud claims involving misrepresentation in product transactions.

When a company self-reports fraud to the DOJ before an investigation begins, it generally receives credit for voluntary disclosure under which framework?

Answer: DOJ Corporate Enforcement Policy

The DOJ's Corporate Enforcement Policy provides companies that voluntarily self-disclose, cooperate, and remediate with potential declinations or reduced penalties.

The 'conscious avoidance' or 'willful blindness' doctrine in fraud cases allows courts to infer knowledge when a defendant:

Answer: Deliberately avoided learning facts that would confirm wrongdoing

Willful blindness applies when a defendant deliberately avoided learning the truth, allowing courts to infer knowledge equivalent to actual knowledge.

Which federal statute prohibits wire fraud and requires use of wire, radio, or television communications in furtherance of a scheme to defraud?

Answer: 18 U.S.C. § 1343

18 U.S.C. § 1343 is the wire fraud statute, which parallels mail fraud but applies to electronic and wire communications.

A court order that temporarily prohibits a party from transferring or dissipating assets during litigation to preserve them for potential judgment is called a:

Answer: Asset freeze injunction

An asset freeze injunction prohibits defendants from moving or dissipating assets pending resolution of the case, preserving funds for potential recovery.

Under SEC Rule 10b-5, insider trading liability requires proof that the defendant traded while in possession of material, nonpublic information obtained through a:

Answer: Breach of fiduciary duty or similar duty of trust and confidence

Under the misappropriation theory, insider trading liability requires a breach of a duty of trust and confidence owed to the source of the information.

In a corporate investigation, documents created by outside counsel while conducting an internal investigation are typically protected from disclosure under:

Answer: Work product doctrine

The work product doctrine protects documents prepared by or for an attorney in anticipation of litigation, including internal investigation materials.