Corporate Governance Regulatory Compliance & Disclosure 3

Question 1

What is the Foreign Corrupt Practices Act (FCPA)?

Accepted Answer

A US law prohibiting bribery of foreign government officials and requiring accurate books and records

Answer

An SEC rule prohibiting US companies from operating in sanctioned countries

Answer

A DOJ regulation requiring disclosure of all international business payments

Answer

A trade law imposing duties on companies that bribe customs officials

Question 2

What is the SEC's 'Howey Test' used to determine?

Accepted Answer

Whether an instrument qualifies as a security subject to SEC registration requirements

Answer

Whether an executive's trading constitutes insider trading

Answer

Whether a company's disclosure is materially misleading under Rule 10b-5

Answer

Whether a board member qualifies as an independent director

Question 3

What is a 'whistleblower bounty' under the SEC's Dodd-Frank program?

Accepted Answer

A monetary award of 10-30% of sanctions over $1 million paid to whistleblowers who provide original information leading to successful SEC enforcement

Answer

A bonus paid to internal compliance officers who prevent regulatory violations

Answer

A reward paid by companies to employees who report policy violations internally

Answer

A tax credit for companies that establish anonymous hotlines for employee complaints

Question 4

What does 'non-GAAP financial measure' disclosure require under SEC Regulation G?

Accepted Answer

Companies must reconcile non-GAAP measures to the most directly comparable GAAP measure and explain why management uses it

Answer

Companies must obtain shareholder approval before using non-GAAP metrics in earnings releases

Answer

All non-GAAP metrics must be audited by the external auditor before public disclosure

Answer

Non-GAAP measures may only be used in investor presentations, not in SEC filings

Question 5

What is the purpose of the SEC's 'Regulation S-K'?

Accepted Answer

It specifies the non-financial disclosure requirements for registration statements and periodic reports filed with the SEC

Answer

It establishes accounting standards for financial statement preparation

Answer

It governs the registration of new securities offerings under the Securities Act

Answer

It sets rules for proxy solicitation and shareholder voting procedures

Question 6

What is 'greenwashing' in the context of ESG disclosure and governance?

Accepted Answer

Making misleading or unsubstantiated claims about a company's environmental practices or sustainability commitments

Answer

Investing corporate funds in environmentally friendly assets to obtain tax benefits

Answer

The SEC's process of reviewing and flagging insufficient climate-related disclosures

Answer

A regulatory penalty imposed on companies that fail to meet their stated emissions targets