1934 Act

Question 1

What did the 1934 Act create?

Answer 1

-The SEC

Question 2

What is the standard of liability under Sec 10(b) of the 1934 Act?

Answer 2

-Scienter and the burden of proof is on the plaintiff

Question 3

What must plaintiffs prove to win a 10b-5 case?

Answer 3

• False statement or omission of material fact
• Scienter by defendant
• Reliance by plaintiff
• Causation

Question 4

What are defenses in Sec 10(b) cases?

Answer 4

• Statute of limitations

- Fraudulent or reckless conduct by plaintiff

Question 5

Are punitive damages allowed in federal securities cases?

Answer 5

-NO NEVER

Question 6

What is required of audits under the 1934 Act?

Answer 6

• Procedures to provide reasonable assurance of detecting illegal acts
• Procedures designed to identify material related party transactions
• Evaluation of whether there is substantial doubt about ability to continue as going concern