Attempts: Average:6 1: Financing a start-up company After the stock market crash
ID: 1171513 • Letter: A
Question
Attempts: Average:6 1: Financing a start-up company After the stock market crash in 1929, the Securities and Exchange Commission (SEC) was established to protect investors from fraudulent investments and to regulate the securities industry Based on your understanding of SEC regulations, which of the following statements are true? Check all that apply As soon as a company decides to sell stock to prospective investors, it starts to advertise in order to increase marketability of its new shares Companies are liable for all of the information presented in the prospectus. can issue securities. prospective investors. The SEC does not allow companies to specify or limit which groups or types of investors to whom a company The SEC requires that all marketing and promotional material be distributed, along with the prospectus, to all In most public offerings, investors are classified based on their profiles. Individual investors with relatively less net worth than senior executives, directors, and high-wealth investors are referred to as A company has to grow to a certain level before it can successfully raise capital by selling its stocok to the public At different stages, a company has different financing needs; it raises capital by reaching out to different kinds of investors. Consider this caseExplanation / Answer
The abuses leading to the stock market crash of 1929 lead to enactment of the Securities Act of 1933 (the "Securities Act"), and the Securities Exchange Act of 1934 (the "Exchange Act") together called the Federal Security Laws.
The key theme of the federal securities law is disclosure. The Securities Act and Exchange Act give investors access to information about the securities they buy and the companies that issue those securities. Federal securities laws primarily accomplish this by requiring companies to disclose information about themselves and the securities they issue.
(A) False since as per Securities Law 1933 the company which wants to go public needs to first register itself with SEC and furnish a prospectus.
(B) True as per Securities Law 1933 companies are liable for all the information they furnish in the prospectus before going public.
(C) False Not all offerings of securities must be registered with the SEC. Some exemptions from the registration requirements include private offerings to a specific type or limited number of persons or institutions.
(D) False SEC wants the prospectus and financials of the company first for the investors while all the promotional material can be supplied later.
In Publis Offering RETAIL INVESTORS are individual investors with less networth than HNIs.
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