1. In order to succeed in an action to pierce the corporate veil, plaintiff must prove: A) That the corporations shareholders have exercised dominion of the corporation for an improper purpose. B) That the shareholders have failed to register the corporation to do business in the state where the action is brought. C) That the corporation is registered to do business in the state where the action is brought. D) A and B but not C. 2. Under SEC Rules governing communications regarding prospective securities to be offered to the public, which of the following MAY NOT occur during the Pre-filing Period or Waiting Period, i.e. until the time that SEC declares the issuers registration statement effective? A) Distribution of a free-writing prospectus by well-known seasoned issuers. B) Regularly released factual information regarding the issuer, provided it does not mention the prospective securities offering. C) A sale of the securities. D) Distribution of a preliminary prospectus. 3. While on vacation, Kyle Kingston, the president and chief executive officer of Remstat, Inc., is called by the CEO of Viokam Corporation, who asks Kingston if Remstat would be interested in buying 25 percent of the outstanding shares of Viokam. Remstat is a billion dollar conglomerate which has contemplated acquiring Viokam for some time. Kingston tells Viokam's CEO that Remstat is not interested. Kingston tells Viokams CEO, however, that KKIM, Inc., would be willing to buy the shares of Viokam. Kingston is the 100 percent shareholder of KKIM. Viokam sells the shares to KKIM for $35 million. A year later, KKIM sells the shares for $55 million to a mutual fund company. When Remstat's directors discover KKIM's purchase and sale of the Viokam shares, they bring an action against Kingston on behalf of Remstat. Which of the following is correct? A) Kingston may be held liable to Remstat because he usurped a corporate opportunity. B) Kingston may not be held liable to Remstat because he became aware of this opportunity outside the scope of his duties as an officer of Remstat. C) Kingston may not be held liable to Remstat because he acted within the discretion afforded him under the business judgment rule. D) Kingston may be held liable to Remstat because he exceeded his authority to act for the corporation. 4. Hamish purchased the securities of the ABC Corporation (ABC), whose stock is traded on the New York Stock Exchange. Hamish believes he lost over $100,000 on those securities after ABC's president admitted that ABCs financial statements contained statements about the profitability of ABC which were significantly exaggerated. Andy Accountant (AA) had audited those statements and had issued an unqualified opinion that they complied with GAAP. Hamish has now brought an action against AA under Section 10(b) of the Securities Exchange Act of 1934 and SEC Rule 10b-5. To succeed, Hamish must prove that: A) Hamish was in privity of contract with ABC and/or AA. B) Hamish was a foreseeable user of the financial statements audited by AA. C) AA's actions materially aided and abetted the wrongful acts of ABC. D) AA acted with scienter. 5. Under the Private Securities Litigation Reform Act of 1995, which of the following actions must an auditor undertake if she determines that the public company client has committed an illegal act with a material impact on the clients financial statements? A) Make an 8-K filing with the SEC within four business days of the accountants determination. B) Calculate the prospective impact on the clients financial statements and, unless the impact is inconsequential, inform the clients management and audit committee. C) File a Form 95 Report with the Public Company Accounting Oversight Board. D) Maintain the confidentiality of the information under the Federal Professional-Client Privilege.