The Legal Environment of Business: Text and Cases (MindTap Course List)
10th Edition
ISBN: 9781305967304
Author: Frank B. Cross, Roger LeRoy Miller
Publisher: Cengage Learning
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Chapter 28, Problem 2IS
Summary Introduction
Case summary: Person LE is an officer in a company MOI. LE acknowledged, that the company’s geologist has discovered a new deposit of oil.
To find: The buying of stock by LE after knowing the information.
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You participated in a pump and dump scheme. Later on a representative from the Securities and Exchange Commission contacts you and requests details in respects to a trade of ABCD shares and other info about the account. According to the CFA Ethic Code and Standards: a. You have not violated the integrity of Capital Markets and should disclose the requested information. b. You violated the integrity of Capital Markets and should disclose the requested information. c. you have violated the integrity of Capital Markets and should not disclose the requested information.
Read and analyze the following situation.Bernard J. Ebbers, chief executive officer and founder of the telecommunications giant, WorldCom, owed the corporation $375 million for a loan secured by shares he owned in the company. The value of the company's stock was declining, to the point that the value of its shares was less than the amount of the loan. On February 2, 2002, Mr. Ebbers engaged in a series of communications with leading Wall Street stock analysts, whose opinions helped drive up the stock price, to refute negative news about the company's financial condition. , which was frightening investors. That day, the company's shares increased by 12% in value. Four months later, the company filed for bankruptcy protection due to its precarious economic condition.
Answer the following questions:Are the actions mentioned above illegal? Are they unethical? Support and explain your answer.
What is the difference between an illegal action and an unethical one? Support and explain your…
1. Exempt from the registration requirement of the Securities Act of 1933 are offerings of securities
a. made to a small number of knowledgeable investors.
b. issued by for-profit organizations.
c. involving a large dollar amount.
d. only for large organizations that are for-profit.
2. Global Investments is a foreign investor. With respect to the operations of a limited liability company in the United States, Global can
a.not become a member but can participate.
b. become a member and participate.c. not become a member or participate.
d. Become a member but cannot otherwise participate.
3. Quorum requirements include _________
a. number of decision-makers that must be present before business can be conducted.
b. how often decision-makers must meet each year.
c. maximum number of shareholders allowed in for-profit companies.
d. all other answer choices
4. Fiduciary duties of the directors and officers include
a.duty of care
b. duty of loyalty
c.…
Chapter 28 Solutions
The Legal Environment of Business: Text and Cases (MindTap Course List)
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- Suppose you had inside information that your employer was thinking about declaring bankruptcy, and you find out that a family member was about to purchase $20,000 in the stock of your employer. To what extent would it be unethical for you to dissuade the family member from making the investment?arrow_forwardJeremy is considering a corporate recapitalization as a gifting technique and has come to his financial planner for more information. Which of the following statements regarding corporate recapitalization are CORRECT? The stock is recapitalized and divided into nonvoting preferred stock and voting common stock. Jeremy retains control of the corporation through the voting rights associated with his preferred stock. Recapitalization can be used in any corporation. The gift of stock given to the junior family members may qualify for valuation discounts. A) II, III, and IV B) I and III C) II and IV D) I and IIarrow_forwardIdentify and explain any THREE capital market securities withappropriate examples?arrow_forward
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