Corporations -- Federal Securities Laws*

Front 1

Corporations

Federal Securities Laws

Section 10(b) action

Back 1

1) Scienter (intent to deceive)

2) Deception (liar, insider trading)

3) In connection with actual purchase of sale or securities

---Private Liability---

4) Reliance

4a) reliance or buying by price affected by fraud on market

4b) loss causation (fraud caused economic losses)

Front 2

Corporations

Federal Securities Laws

Section 10(b) action
Misappropriation / Tipper / Tippee

Back 2

Misappropriation -- taking material non-public information and using it to purchase or sell securities

Tipper -- one who tips inside information for personal benefit to another who trades on it

Tippee -- one who received inside information and trades on it with knowledge that information was disclosed in breach of fiduciary duty

Front 3

Corporations

Federal Securities Laws

Section 16(b) Short-Swing Trading Profits

Back 3

Reporting corporations ONLY
-report to SEC
-listed on a national exchange
-at least 500 sh/h and $10 million in assets

Big Shot Defendants
-officer/director/owner or more than 10% of shares
-------> cannot buy and sell stock within a single six-month period
-------> look at sale date, then backward and forwards in date, if any sale resulting in profit -- that goes to corporation

Front 4

Corporations

Federal Securities Laws

Sarbanes-Oxley

Back 4

Reporting Corporations ONLY
report to SEC
-listed on a national exchange
-at least 500 sh/h and $10 million in assets

CEO and CFO must certify that based on Officer's knowledge, reports filed with SEC do not contain falsehoods

Front 5

Corporations

Federal Securities Laws

Sarbanes-Oxley

Back 5

Violation of Sarbanes-Oxley may result in recovery of benefits made within 12 months after false reports filed, including incentive based compensation

Also includes black out periods when EEs prohibited from trading in their retirement plan securities