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98 Cards in this Set

  • Front
  • Back
IPO definition
Initial Public Offering - when a company offers stock in the public market place for the first time.
Interstate IPO
Offering to potential investors amongst several states.
Federal Law
Intrastate IPO
Offering to potential investors within a state.
State Law
Security definition and example
Investment of money in a common enterprise, with the expectation of profit generated by the efforts of others.
Called the Howie Test.
Ex: Share of stock, warrant
Securities Act of 1933 - purpose
To eliminate fraudulent conduct in the marketplace
to give investors full disclosure
prohibits interstate offerings until they file registration statement with SEC
2 parts of the Registration Statement
Supplemental Information
General Information (Industry information, business plan, product quality plan)
Risk Assessment
Audited Financial Information (BS, IS Stmnt. of CF)

Goes to potential offeree
Supplemental Information
Cost of IPO
Any major pending contracts

Goes to SEC
3 Stages of filing process
Prefiling Period - no solicitation, no sales
Waiting Period - no sales, limited solicitation; tombstone ad, red haring prospectus
Post effective period - sales, and solicitation; all potential investors get a copy of final prospects
Exempt securities
Exempt Transactions
Exempt Securities examples
government securities, charities, educational institutions, financial institutions
Exempt Transactions examples
Intrastate offering, minor offering
Securities Exchange Act of 1934 - Purpose
Promote full disclosure
Securities Exchange Act of 1934 - Application
Traded on national exchange
More than $10,000,000 in assets AND over 500 shareholders
Securities Exchange Act of 1934 - Filings
Every year, file form 10K (similar to registration statement)
Every quarter, file form 10Q (financial information)
If material event, file form 8K
Consequences for Violation of Securities
Civil Liability
Criminal Prosecution
Civil Liability - Violation of IPO
sued by potential investors.
issuer, underwriter, accountants, and bankers can all be sued by potential investors.
SEC - Violation of IPO
fines up to 300%
officers/directors can be fired from any publicly traded company again
suspend trading of stock
Criminal Prosecution - Violation of IPO
SEC works with justice system
fines up to $225,000
25 years in prison
prosecute FRAUD, not mistakes or incompetence
State Regulation
Blue Sky Laws
Business Crimes - def.
crimes committed for or against a business
Why people commit business crimes
greed, money, pressure to meet expectations, personal pressure, opportunity
Indirect cost of business crimes
increased security, increase in insurance premiums, stiffer regulations
Liability of personal crimes
personal knowledge - anyone who knew or should have known what was going on
Penalties for business crimes - Reform
Conform conduct, incentives
Fines - percentage of net earnings, holding officers and directors responsible
Penalties for business crimes - creativity
monitors company
shame punishment
Penalties for business crimes - sentencing guidelines
did company cooperate with authorities?
did they admit guilt?
pay restitution?
did they have a code of ethics? internal controls?
Elements of crimes (latin words)
Actus Reus - Requirement of some sort of specific action/conduct
Mens Rea - required state of mind or intent to commit the crime; accident or oversight is not criminal
Examples of business crimes (Federal)
Theft and Embezzlement
Obstruction of Justice
Computer Crimes
Embezzlement - def.
Violating a position of trust
Obstruction of Justice - ex.
Altering or destroying documents that are subject of investigation
encouraging some else to do it
encouraging or giving false testimony
Procedural Rights - 4th amendment
unreasonable search and seizure
protection from government
people and business have 4th amendment protection
Reasonable Expectation of Privacy includes:

Not trash
When does the police not need a search warrant
If you give consent
It is in plain view
Search incident to arrest
Exclusionary Rule (4th amendment)
Fruit of the poisonous tree
any evidence obtained without 4th amendment right is dismissed
Procedural Rights - 5h amendment
Self Incrimination
Self Incrimination (5th amendment)
defendant does not have to testify against themselves
not for businesses, only natural people
Voluntary Confessions (5th amendment)
Crime control - prosecution says you won't admit guilt if you're innocent
Due process - defense says you should look at the circumstances of confession
Factors of a confession
Physical/Psychological - Intelligence, experience with police department, use of drugs/alcohol, emotional stability, deprivation of food and sleep, financial well being, etc.
Police Interrogation Tactics - deals, threats, violence, trickery, deceit prolonged interrogation, medical examinations
Who decides if a confession was voluntary?
just because some factors are present does not mean it was involuntary
Miranda (5th amendment)
Anybody in custody gets it
before interrogation
given if you're not allowed to leave, don't have to be "booked"
covers everyone, can be invoked at anytime
failure to give Miranda - statements are dismissed or anything that is later found because of the statements
Procedural Rights - 6th amendment
Right to counsel
Right to a speedy trial
Right to counsel (5th amendment)
right when under interrogation
right once judicial proceedings have begun
Procedural Right - 8th amendment
Excessive Bail - set by statutes
Cruel and unusual punishment
Criminal Trial Process
Formal Sentencing
Criminal Trial Process - Charge
Criminal Trial Process - Arraignment
1st official appearance in court
formally told the charges against you
plea guilty or not guilty
appoint counsel
Criminal Trial Process - discovery
exchange of information
Criminal Trial Process - motions
ask for suppression hearing
throw out evidence (amendment violation)
no jury
Criminal Trial Process - Plea
plea - no amendment violation
dismiss - throw out evidence
Criminal Trial Process - Trial
Voir Dire
Burden - beyond a reasonable doubt (Prosecution)
Bifurcated - guilt phase; Penalty phase - jury's opinion
Double Jeopardy
Criminal Trial Process - Formal Sentencing (When)
4-6 weeks after trial
Torts - def.
some type of interference with someone or their property that results in injury to that person or their property.
Civil wrong that does not come through a breach of contract
Goal of torts
to make injured party whole again
punishment of torts
punitive damages
Categories of torts
strict liability
Intentional Torts - 7 ex.
Contract Interference
False Imprisonment
Invasion of Privacy
Civil Battery
Civil Assault
Intentional Tort - Def.
deliberate action or voluntary act that harms a protected interest
Defamation - Tort
a false statement that is published to a 3rd party that causes harm
Slander - spoken
Libel - written
Defenses of defamation
it was the truth
opinion and analysis
privileged speech
Contract Interference - Torts
intentionally persuaded another to break a contract already in existence
False Imprisonment - Torts
Intentionally detaining a person against his/her will for any period of time
IIED - Torts
Intentional Infliction of Emotional Distress
imposes liability for conduct that goes beyond all bounds of decency and results in emotional distress to the victim
Civil Battery - Torts
Intentionally touching another in a harmful or offensive way without legal justification or consent.
Spitting on someone or blowing smoke in their face
Civil Assault - Torts
Incomplete battery
intentionally causing another to believe they are about to be the victim of battery
Negligence - def.
Harm caused by accident, usually carelessness
bulk of torts
most circumstantial
Elements of Negligence
Duty - act reasonably/prudently
Breach - act/failure to act
Causation - causal link between victims injury/damage and the act or failure to act of the defendant
3 Defenses of Negligence
Contributory negligence - most abolished; was plaintiff somewhat responsible for injury.
Comparative negligence - carelessness; what percent of responsibility is plaintiff fault?
Assumption of the risk - consent; plaintiff knows potential risk or danger and proceeded anyway; voluntary assumption of risk
Torts Reform
For: reduce frivolous lawsuits, reduce insurance premiums
Against: decrease consumer protection

Ex of Tort Reform: placing caps on tort reward
Strict Liability - Torts
Def - hold someone responsible for harm without proof of carelessness.
absolute liability for conduct
inherently dangerous material
Products Liability - def.
branch of law governing litigation from harm caused by defective products
Caveat Emptor - Product Liability
let the buyer beware
consumers responsibility to stay away from bad products
pro business
Privity - Product Liability
only consumers in privity could recover; only purchaser can sue seller; not any others injured; only seller/manufacturer was responsible for defect
Express Warranty
Promises quality, performance, ability; has to be verifiable facts
can be expressed orally or written
Includes the opinion of experts
Federal Trade Commission (Advertising)
Regulatory agency designed to: prevent unfair and deceptive trade practices
FTC - regulates by protecting through...
Content - prices cannot be inflated to cover markdowns
Performance - supported by reliable studies
Celebrity enforcements - have to have used the product, give their own opinion or disclose if not
Bait and Switch
Product comparisons - results compared by reliable study. needs to be administered
Remedies the FTC can offer (Advertising)
Run corrective ads
injunction - stop ads
reimburse consumers
Implied Warranties - def/ex.
created by operation of law
Implied warranty of merchantability
Implied warranty for a particular purpose
Implied warranty of merchantability
goods are fit for ordinary purposes; fair and average quality
implied warranty for a particular purpose - def/requirements
purchase from a seller of goods
a seller has skill in the use of the goods in question
buyer is relying on sellers skill
seller knows buyer is relying on sellers skill
seller makes a recommendation to the buyer
Disclaimers - warranties
Express warranty cannot be disclaimed
implied warranty - label good "as is" or "with all faults"
Negligence - Products Liability
bulk of products liability cases
must have all elements (duty, breach, causation, damages)
Strict Liability - Products Liability
condition of product
covers most people involved (manufacturers, sellers, etc)
Defenses of products liability cases
misuse of a product (non-foreseeable misuse)
comparative negligence - portion fault
assumption of the risk
Common products liability cases
design defects
lack of warning
handling/packaging defects
Consumer Product safety commission
set standards for consumer products
regulatory agency; fan fine, force recalls, record keeping
Pollution - cannot be reversed =
negative externality
Pollution - self and government regulation
self - companies/people going above and beyond regulations
government - make laws, give tax credits
Regulations/Law concepts - pollution
cost-benefit analysis
impact on future
proving causation
who will pay for protection?
Common law - nuisance
when activities of one landowner interferes with another landowners use and enjoyment of their property
smells, pollution, noise
goal is to remove interference, not money
Common law - activists
not in my backyard
build absolutely nothing anywhere near anything
Statutory provisions - pollution
air pollution
water pollution
solid waste disposal
NEPA of 1969
Air pollution
clean air act
EPA sets standards for air quality
goal - reduce airborne pollutants
penalty - fine up to $25,000/day; up to 15 years in prison, fines up to 1 million dollars
Water pollution
clean water act - transfer from state to federal control; set range of discharge into waterways - EPA
safe drinking water act - EPA established standards for drinking water; state enforces but EPA sets the minimum standards
Oil pollution act
Solid waste disposal
toxic substances control act - EPA sets standard for managing/use/disposal of toxic substances
NEPA of 1969
National Environmental Policy Act
government general commitment to a clean and healthy environment
environmental impact statement - anytime federal government engaging in an act or passing a law that has a substantial impact on environment, must complete EIS
Environmental Impact Statement includes
impact it has on environment
adverse affects on environment
measures taken to make consequences less significant
alternatives considered
EPA Enforcement on pollution
civil fines - injunction relief (start/stop an action); lawsuits
criminal - repeated and willful violations (jail time, fines)