question archive 1) Marcmen Manufacturing Inc
1) Marcmen Manufacturing Inc
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1) Marcmen Manufacturing Inc. files a registration statement with the SEC before making an offering to the general public. The registration contains false, immaterial statements of which the investors are unaware. Marcmen is charged with violating the Securities Act of 1933. Marcmen’s best defense is
a. the investors were not aware of the misrepresentations.
b. the issuer reasonably believed the misstatements were true.
c. the offering was made available to the general public.
d. the untrue statements were not material.
2) As part of a stock offering for Stakemark Realty, the firm’s accountant Edward intention¬ally misrepresents material facts in the prospectus. Frankie buys the stock unaware of the misrepresentation and suf¬fers a loss. Edward may be subject to
a. a fine and damages only.
b. a fine and imprisonment only.
c. a fine, imprisonment, and damages.
d. damages only.
3)
Linfield Retail Stores Corporation is a public company with a market capitalization of less than $75 million. Linfield is poised to issue securities in a transaction that, under the Securities Act of 1933, is “exempt.” This enables Linfield to
a. reduce the compliance costs by not requiring an auditor report.
b. buy and sell the securities without liability for “recaptures.”
c. make forward-looking financial forecasts without liability.
d. withhold inside information from accredited investors.
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Answer:
??????1) D. The untrue statements were not material.
2) C. A fine, imprisonment, and damages.
3) a. reduce the compliance costs by not requiring an auditor report.
Explanation:
1.
Since the misrepresented facts were not material to the registration, this is the best defense since it'd show that the intention wasn't to deceive.
2.
Since the facts that Edward presented were false and were material tot he case, it means that there's a possibility of fine, imprisonment and damages since it is a crucial part of the prospectus and there's a fraud with investors.
3.
The correct answer is option (A) i.e Reduce the compliance costs by not requiring an auditor report.
