Stock Lawyer Stock Market Loss Lawyer 3

Question 1

What is a 'short-swing profit' under Section 16(b) of the Securities Exchange Act?

Accepted Answer

Profits made by insiders buying and selling within six months

Answer

Section 16(b) requires corporate insiders to return profits from any purchase and sale of company stock within a six-month period.

Question 2

What does 'material misrepresentation' mean in securities law?

Accepted Answer

A false or misleading statement that a reasonable investor would consider important

Answer

A material misrepresentation is a false or misleading statement about a fact that a reasonable investor would find significant when making investment decisions.

Question 3

In a FINRA arbitration claim, what is the typical statute of limitations for filing?

Accepted Answer

6 years from the date of the event giving rise to the claim

Answer

FINRA's eligibility rule generally requires claims to be filed within six years of the event or occurrence giving rise to the claim.

Question 4

What is 'excessive trading' or 'churning' in broker misconduct cases?

Accepted Answer

Executing excessive transactions primarily to generate commissions

Answer

Churning occurs when a broker excessively trades an investor's account primarily to generate commissions rather than serve the investor's interests.

Question 5

What is the 'fraud-on-the-market' theory used for in securities class actions?

Accepted Answer

To establish reliance by all class members without individual proof

Answer

The fraud-on-the-market theory presumes that all investors in an efficient market rely on the integrity of the market price, which reflects all public information including misstatements.

Stock Lawyer Practice Test

Stock Lawyer Practice Test

Stock Lawyer Stock Market Loss Lawyer 3