CIRO Regulatory Compliance & Governance 3

Question 1

A company issues a press release containing a forward-looking earnings projection. Under the Private Securities Litigation Reform Act (PSLRA), which protection may apply?

Accepted Answer

The Safe Harbor provision for forward-looking statements accompanied by meaningful cautionary language

Answer

The PSLRA safe harbor protects forward-looking statements that are accompanied by meaningful cautionary language identifying risk factors.

Question 2

When a public company is conducting a stock buyback program, Rule 10b-18 provides a safe harbor from manipulation charges if the company:

Accepted Answer

Uses a single broker-dealer per day and buys at or below the market bid price with volume limits

Answer

Rule 10b-18 safe harbor conditions include using one broker per day, price restrictions tied to the prevailing bid, and daily volume limits.

Question 3

Which governance practice is specifically required by Dodd-Frank for U.S. public companies?

Accepted Answer

Shareholder advisory vote on executive compensation (say-on-pay)

Answer

Dodd-Frank mandated say-on-pay votes, giving shareholders a nonbinding voice on named executive officer compensation at least every three years.

Question 4

Under SEC rules, an investor who beneficially owns more than 5% of a company's voting securities must file which form within 10 days of crossing that threshold?

Accepted Answer

Schedule 13D or 13G

Answer

Section 13(d) and 13(g) of the Exchange Act require disclosure on Schedule 13D (or 13G for passive investors) when beneficial ownership exceeds 5%.

Question 5

An IR officer learns that an activist hedge fund has built a 4.9% stake and intends to cross 5% next week. The company's best immediate compliance step is to:

Accepted Answer

Alert legal counsel and prepare for a potential Schedule 13D filing and board notification

Answer

Legal counsel should be engaged to prepare the board and management for potential 13D disclosure and the governance response strategy.

(CIRO) Certified Investor Relations Officer Practice Test

(CIRO) Certified Investor Relations Officer Practice Test

CIRO Regulatory Compliance & Governance 3