CEP Legal & Regulatory Compliance

Question 1

What does the SEC require from companies offering equity compensation?

Accepted Answer

Disclosures about equity compensation

Answer

Employee consent

Answer

Detailed financial records

Answer

Annual audits

Question 2

Which of the following laws governs the taxation of stock options?

Accepted Answer

The IRS code

Answer

The Securities Act

Answer

The Fair Labor Standards Act

Answer

The Employee Retirement Income Security Act

Question 3

What is the primary goal of the Employee Retirement Income Security Act (ERISA)?

Accepted Answer

To protect employee benefits

Answer

To promote fair wages

Answer

To regulate option pricing

Answer

To restrict plan design

Question 4

Which tax rule applies to Incentive Stock Options (ISOs)?

Accepted Answer

Tax-deferred until sale

Answer

Taxed upon exercise

Answer

Taxed immediately

Answer

Taxed on vesting

Question 5

What does the term '409A valuation' refer to in stock options?

Accepted Answer

The tax treatment of options

Answer

The price of stock options

Answer

The method of valuing equity

Answer

The market cap of the company

Question 6

Which of the following actions would violate securities law in equity compensation?

Accepted Answer

Falsifying option grants

Answer

Properly disclosing grants

Answer

Granting shares to executives

Answer

Performing 409A valuation

Question 7

What is the purpose of the Sarbanes-Oxley Act in relation to equity compensation?

Accepted Answer

To ensure reporting accuracy

Answer

To govern pension plans

Answer

To promote executive bonuses

Answer

To reduce taxes on stock options

Question 8

What must be filed with the SEC when a company grants stock options?

Accepted Answer

Form 4

Answer

Form 10-K

Answer

Form S-1

Answer

Form 8-K

Question 9

Which regulatory body oversees compliance with securities laws in the U.S.?

Accepted Answer

The SEC

Answer

The IRS

Answer

The Federal Reserve

Answer

The Department of Labor