Stock Lawyer Cheat Sheet 2026

The 30 highest-yield Stock Lawyer facts, distilled from real exam questions. Print it, save it as a PDF, or study it here — free, no sign-up.

1. What variables impact the stock market? → All of the above
2. What is the criminal penalty for insider trading conviction under federal law? → Up to 20 years imprisonment and $5 million fine per violation
3. Under the 'classical theory' of insider trading, who owes a duty that prohibits trading on material nonpublic information? → Corporate insiders who owe a fiduciary duty to shareholders
4. The first step in filing a claim against a broker is to determine which securities are at risk. → True
5. What is 'say on pay' under the Dodd-Frank Act? → A mandatory shareholder advisory vote on executive compensation at least every three years
6. The PSLRA's 'safe harbor' provision protects which type of statements from securities fraud liability? → Forward-looking statements accompanied by meaningful cautionary language
7. Which section of the Securities Act of 1933 provides a private right of action for material misstatements in a registration statement? → Section 11
8. Which organization regulates stockbroker and brokerage firm conduct? → United States Securities and Exchange Commission (SEC) and FINRA
9. Under Regulation D, which exemption allows companies to raise unlimited capital from accredited investors without SEC registration? → Rule 506(b)
10. Which of the following is NOT a duty of an investment advisor? → making accurate predictions about the future of the stock market
11. Which of the following is true regarding blue chip stocks? → The stocks are consistently profitable with a dividend payment
12. What must a plaintiff prove to establish 'loss causation' in a securities fraud case under Rule 10b-5? → That the alleged fraud actually caused the plaintiff's economic loss
13. Which regulation allows large institutional investors to trade restricted and control securities among themselves without SEC registration? → Rule 144A
14. What civil penalty can the SEC impose on a person found liable for insider trading? → Up to three times the profit gained or loss avoided
15. Which of the following is NOT a required element in a private Rule 10b-5 securities fraud claim? → A prior criminal conviction of the defendant
16. In a securities class action lawsuit, the 'lead plaintiff' is presumed to be: → The plaintiff with the largest financial interest in the outcome
17. Under Section 220 of the Delaware General Corporation Law, what right do shareholders have? → The right to inspect corporate books and records for a proper purpose
18. What is a 'prospectus' in securities law? → A formal document disclosing details of a securities offering to potential investors
19. What provision provides the primary basis for private securities fraud lawsuits in federal court? → Securities Exchange Act of 1934, Rule 10b-5
20. What is the primary function of a 'claims administrator' in a securities class action settlement? → To process proof of claim forms and distribute settlement funds to eligible class members
21. Under the Securities Exchange Act of 1934, which section requires periodic reporting by public companies? → Section 13
22. In securities class action litigation, what is a 'class period'? → The timeframe in which the alleged fraud occurred and shares were artificially mispriced
23. What is the primary regulatory body overseeing securities markets in the United States? → SEC
24. What is the organization that oversees the conduct of registered stockbrokers and brokerage firms? → FINRA
25. What standard of liability applies to a company's auditors in a Section 11 claim under the Securities Act of 1933? → Due diligence defense available
26. What must the government prove to establish 'tipping' liability against a tipper in an insider trading case? → That the tipper received a personal benefit from disclosing material nonpublic information
27. What do the bull and the bear represent? → The bear indicates declining stock prices, whereas the bull indicates rising stock prices.
28. What is the statute of limitations for a private action under Section 10(b) of the Securities Exchange Act? → 2 years from discovery, 5 years from violation
29. Which SEC rule defines 'material nonpublic information' for purposes of insider trading enforcement? → There is no single rule — materiality is a facts-and-circumstances test
30. When your broker commits fraud, you have the right to bring them to justice by filing a complaint with the: → Financial Industry Regulatory Authority (FINRA)