41.) A "tippee" cannot be liable for insider trading. True or False

42.) The SEC has the ability (under the Insider Trading Sanctions Act of 1998) to penalize insider traders up to three times the amount of the profit gained or the loss avoided as a result of the unlawful purchase or sale. True or False

43.) Robert owned an apple orchard in California and offered to sell small plots to the general public. The plots were 10-feet long by 10-feet wide. In addition to the land, Robert offered a contract to harvest and sell the apples. Is Robert offering a security?

A. Robert is offering a security an investment contract.

B. Robert is offering a security a contract to sell apples.

C. Robert is not offering a security because he is selling land.

D. Robert is not offering a security because it is a small offering.

E. Robert is not offering security because the sales are limited to California.

44.) Snitch, an officer of Undergrowth Corporation, tells Gumst about fraudulent dealings going on within Undergrowth, and urges Gumst to investigate the matter. Gumst begins to investigate and he discovers wrongdoing. During the investigation, he mentions to his friend Jittery some of the facts he is uncovering in his investigation. Jittery, who owns some stock in Undergrowth, sells it immediately and thus avoids the huge downswing in share price that ensues when the results of Gumst's investigation are announced. Has Gumst engaged in insider trading?

A. No, because only the person who actually buys or sells the stock can commit insider trading.

B. No, because neither Snitch nor Gumst had any motive of personal gain.

C. No, because he was not an officer, director, or major shareholder of Undergrowth.

D. Yes.

45.) Adona, Inc. has decided to "go public." Adona would like to avoid registration under the Securities Act of 1933 and hopes to fit within an exemption. For a small public issue, the transactions involving sales to accredited investors can be up to

A. $1 million.

B. $3 million.

C. $5 million.

D. $7 million.

E. $10 million.

46.) Which case explored whether remote ''tippees''individuals who hear about the information from someone who clearly is an insider should be liable for insider trading.

A. United States v. O'Hagan

B. M. J. Haug v. United States

C. Chiarella v. United States

D. United States v. J. P. Joines

E. None of the above

47.) In this case ___________________, the U.S. Supreme Court established the ''misappropriation'' theory of insider trading, which holds that a person commits fraud in connection with a securities transaction when that person misappropriates confidential information for securities trading purposes, in breach of a duty owed to the source of the information.

A. United States v. O'Hagan

B. M. J. Haug v. United States

C. Chiarella v. United States

D. United States v. J. P. Joines

E. None of the above

48.) _______________ is the act of trading securities of a publicly traded company while in possession of material nonpublic information about that company, is prohibited.

49.) The_______________________ company is a company that has made less than one billion dollars in gross revenue during the previous fiscal year.

50.) State security laws are often called _________________ laws.