CIRO Regulatory Compliance & Governance 5

Question 1

A company's insider trading policy typically establishes 'blackout periods' primarily around which events?

Accepted Answer

Earnings announcements and other predictable material disclosure events

Answer

Blackout periods are imposed around earnings releases and other foreseeable material events to prevent trading while insiders possess MNPI.

Question 2

A 10b5-1 trading plan allows insiders to trade company securities while aware of MNPI, provided the plan is:

Accepted Answer

Established in good faith when the insider is not aware of MNPI and specifies amount, price, and timing in advance

Answer

A valid 10b5-1 plan must be adopted when the insider lacks MNPI and must specify trade parameters or delegate discretion to a third party without future influence.

Question 3

Under the Sarbanes-Oxley Act Section 906, the penalties for a CEO or CFO who knowingly certifies a false financial report include:

Accepted Answer

Criminal fines up to $5 million and imprisonment up to 20 years

Answer

SOX Section 906 imposes criminal penalties of up to $5 million in fines and 20 years in prison for knowingly certifying false financial statements.

Question 4

An IR officer is preparing the company's annual meeting proxy statement. The record date for determining which shareholders may vote is set by:

Accepted Answer

The company's board of directors, typically 10 to 60 days before the meeting

Answer

Under state corporate law and SEC rules, the board sets the record date, which must fall between 10 and 60 days before the shareholder meeting.

Question 5

The concept of 'materiality' in securities law is most accurately defined as information that:

Accepted Answer

A reasonable investor would consider important in making an investment decision

Answer

The Supreme Court's 'reasonable investor' standard defines material information as information that a reasonable investor would consider significant when making investment decisions.

(CIRO) Certified Investor Relations Officer Practice Test

(CIRO) Certified Investor Relations Officer Practice Test

CIRO Regulatory Compliance & Governance 5