CFS Legal Aspects & Regulatory Compliance 2 — Questions and Answers
Question 1: Under the Sarbanes-Oxley Act, what is the maximum criminal penalty for knowingly destroying documents to obstruct a federal investigation?
- 5 years imprisonment
- 10 years imprisonment
- 20 years imprisonment (Correct answer)
- 25 years imprisonment
Correct answer: 20 years imprisonment
SOX Section 1102 imposes up to 20 years imprisonment for knowingly destroying or falsifying records to obstruct a federal investigation.
Question 2: Which legal doctrine allows prosecutors to hold a corporation criminally liable for crimes committed by its employees acting within the scope of their employment?
- Respondeat superior (Correct answer)
- Piercing the corporate veil
- Alter ego doctrine
- Vicarious estoppel
Correct answer: Respondeat superior
Respondeat superior ('let the master answer') is the doctrine under which corporations face criminal liability for employees' acts within the scope of employment.
Question 3: Under the Federal Sentencing Guidelines, what term describes a formal program designed to prevent and detect criminal conduct within an organization?
- Internal control framework
- Effective compliance and ethics program (Correct answer)
- Risk management plan
- Whistleblower protection policy
Correct answer: Effective compliance and ethics program
The Federal Sentencing Guidelines use the term 'effective compliance and ethics program' to describe the formal structure organizations must have to earn culpability score reductions.
Question 4: Which FCPA provision prohibits U.S. companies from bribing foreign government officials to obtain or retain business?
- Accounting provisions
- Anti-bribery provisions (Correct answer)
- Internal controls provisions
- Disclosure provisions
Correct answer: Anti-bribery provisions
The FCPA's anti-bribery provisions explicitly prohibit offering, paying, or authorizing payments to foreign officials to obtain or retain business.
Question 5: A civil lawsuit filed under the False Claims Act that is initiated by a private citizen on behalf of the government is called a:
- Qui tam action (Correct answer)
- Class action
- Declaratory judgment action
- Writ of mandamus
Correct answer: Qui tam action
Qui tam actions allow private citizens (relators) to sue on the government's behalf under the False Claims Act and share in any recovery.
Question 6: Under the Bank Secrecy Act, financial institutions must file a Currency Transaction Report (CTR) for cash transactions exceeding:
- $5,000
- $7,500
- $10,000 (Correct answer)
- $25,000
Correct answer: $10,000
The BSA requires filing a CTR for any cash transaction exceeding $10,000 in a single business day.
Question 7: Which element is NOT required to prove mail fraud under 18 U.S.C. § 1341?
- A scheme to defraud
- Use of the U.S. mail
- Intent to defraud
- Actual financial loss by the victim (Correct answer)
Correct answer: Actual financial loss by the victim
Mail fraud does not require proof of actual financial loss — only a scheme to defraud, intent, and use of the mails to execute the scheme.
CFS Legal Aspects & Regulatory Compliance 2
Under the Sarbanes-Oxley Act, what is the maximum criminal penalty for knowingly destroying documents to obstruct a federal investigation?