CFS Legal Aspects & Regulatory Compliance 3 — Questions and Answers
Question 1: Under RICO, what is the minimum number of predicate acts required to establish a 'pattern of racketeering activity'?
- One act
- Two acts (Correct answer)
- Three acts
- Five acts
Correct answer: Two acts
RICO requires at least two predicate acts of racketeering within a 10-year period to establish a pattern of racketeering activity.
Question 2: A company executive who turns government informant and cooperates with prosecutors typically receives a formal agreement known as a:
- Deferred prosecution agreement
- Plea agreement
- Cooperation agreement (Correct answer)
- Non-prosecution agreement
Correct answer: Cooperation agreement
A cooperation agreement formalizes the terms under which a defendant provides substantial assistance to prosecutors in exchange for sentencing consideration.
Question 3: The legal principle that prevents prosecutors from trying a defendant twice for the same offense is known as:
- Collateral estoppel
- Double jeopardy (Correct answer)
- Res judicata
- Statute of limitations
Correct answer: Double jeopardy
The Double Jeopardy Clause of the Fifth Amendment prohibits a second prosecution for the same offense after acquittal or conviction.
Question 4: Under Dodd-Frank, a whistleblower who voluntarily provides original information leading to an SEC enforcement action yielding over $1 million may receive:
- 5–10% of the sanction
- 10–30% of the sanction (Correct answer)
- 20–40% of the sanction
- 30–50% of the sanction
Correct answer: 10–30% of the sanction
Dodd-Frank's SEC whistleblower program awards between 10% and 30% of sanctions collected in qualifying enforcement actions exceeding $1 million.
Question 5: Which act established the Public Company Accounting Oversight Board (PCAOB)?
- Dodd-Frank Act
- Gramm-Leach-Bliley Act
- Sarbanes-Oxley Act (Correct answer)
- Securities Exchange Act of 1934
Correct answer: Sarbanes-Oxley Act
SOX Section 101 created the PCAOB as a nonprofit corporation to oversee audits of public companies and protect investors.
Question 6: Which type of federal subpoena compels a witness to appear and produce documents before a grand jury?
- Subpoena ad testificandum
- Subpoena duces tecum (Correct answer)
- Writ of certiorari
- Bench warrant
Correct answer: Subpoena duces tecum
A subpoena duces tecum compels a person to bring specified documents or records to a grand jury or court proceeding.
Question 7: An employee who reports suspected fraud internally but is then terminated may have a retaliation claim under which SOX provision?
- Section 302
- Section 404
- Section 806 (Correct answer)
- Section 1107
Correct answer: Section 806
SOX Section 806 protects employees of publicly traded companies who report suspected securities fraud from retaliation.
CFS Legal Aspects & Regulatory Compliance 3
Under RICO, what is the minimum number of predicate acts required to establish a 'pattern of racketeering activity'?