Stock Lawyer Stock Broker Fraud Lawyer 3

Question 1

Which federal agency has primary authority to bring civil enforcement actions against securities fraud perpetrators?

Accepted Answer

Securities and Exchange Commission (SEC)

Answer

The SEC is the primary federal civil enforcement authority for securities fraud, with the power to seek injunctions, disgorgement, and civil penalties.

Question 2

What is 'frontrunning' and why is it illegal?

Accepted Answer

Trading for personal accounts based on knowledge of pending client orders before executing those orders

Answer

Frontrunning involves a broker trading their own account based on advance knowledge of pending client orders, exploiting information that should be used solely to benefit the client.

Question 3

Under the Securities Exchange Act of 1934, what is the statute of limitations for private SEC Rule 10b-5 fraud claims?

Accepted Answer

2 years from discovery of the fraud, but no more than 5 years after the violation

Answer

Under 28 U.S.C. § 1658(b), private Rule 10b-5 claims must be filed within 2 years of discovery of the fraud and no later than 5 years after the actual violation.

Question 4

What is the role of a 'receiver' appointed by a court in a securities fraud case?

Accepted Answer

To take control of a fraudulent operation's assets and distribute them to victims

Answer

A court-appointed receiver takes control of a fraudulent enterprise's assets, winds down operations, marshals funds, and distributes proceeds to defrauded investors.

Question 5

Which type of stockbroker misconduct involves a broker placing client funds in investments that benefit the broker's related parties at the client's expense?

Accepted Answer

Self-dealing

Answer

Self-dealing occurs when a broker directs client assets into investments that personally benefit the broker or their associates, creating an undisclosed conflict of interest.

Stock Lawyer Practice Test

Stock Lawyer Practice Test

Stock Lawyer Stock Broker Fraud Lawyer 3