CSCP Securities Laws & Regulations 4

Question 1

Under Section 16(b) of the Exchange Act, 'short-swing profits' recovered from corporate insiders are profits earned from purchases and sales within what time period?

Accepted Answer

6 months

Answer

Section 16(b) requires corporate insiders to disgorge any profits from matching purchases and sales (or sales and purchases) occurring within any 6-month period.

Question 2

Which regulation governs the offer and sale of securities outside the United States by U.S. issuers without SEC registration?

Accepted Answer

Regulation S

Answer

Regulation S provides a safe harbor for offers and sales of securities occurring outside the United States that are exempt from Section 5 registration requirements.

Question 3

A company conducting a tender offer must keep the offer open for at least how many business days under Rule 14e-1?

Accepted Answer

20 business days

Answer

Rule 14e-1 requires that a tender offer remain open for a minimum of 20 business days from the date it is first published or sent to security holders.

Question 4

Under the Investment Company Act of 1940, a company must register as an investment company if it holds what percentage of its assets in investment securities?

Accepted Answer

More than 40%

Answer

Under Section 3(a)(1)(C) of the Investment Company Act, a company is deemed an investment company if more than 40% of its assets (excluding government securities and cash) are investment securities.

Question 5

Which SEC rule prohibits broker-dealers from trading ahead of customer orders in the same security?

Accepted Answer

Rule 5320 (Manning Rule)

Answer

FINRA Rule 5320 (the Manning Rule) prohibits broker-dealers from trading a security for their own account at a price that would satisfy a customer's limit order without executing the customer's order first.

(CSCP) Certified Securities Compliance Professional Practice Test

(CSCP) Certified Securities Compliance Professional Practice Test

CSCP Securities Laws & Regulations 4