varta/yy 1z:51erzuz wze your Seu un avr /v0s - Sample Securities Regulation Exam Prog Aecboe- 1.0: BAe From: orlan M. Johnsono4/14/o8 12:51 rzUZ 628 9002 SEU 1M I (89 points) | harry is a stockbroker. Nat is President of X Oil i and Gas Exploration Corp.. whose 1.000,000 shares of outstanding common stock are traded on the American Stock Exchange. On January 1, 1983, at a New Year's day ' brunch, Nat told Larcy that X had discovered diamond I not otherwise available to the public": | discovered diamonds on one of. its land holdings’ in’) { Surinam; and second, in the near future, x would. aakes very trustworthy and a good man.”———— cy oavi4/98 ig.003/006 12-52 202 628 9002 SEC 1M with Mute and Jef) with 18 other people who, together with Mutt and Jef€ (hereafter known as the Mid group), bought 100,000 shares of % prior to April 1, all at On May 3, 1983, X made a tender offer for ‘par eae completely successful in its offer. Sensing that X was “hot,” the Board of Dirt P, a Delaware Corporation whose stock is tradedson" shares of X at $7/share, and on July 31,, 1983; purchased another 10,000 shares at $7/share: Se: ae On August 2, 1983, P mailed a proxy. st its stockholders stating stock be increased by 500,000. shar purpose of this increase is: to: consideration in the’ various busine: opportunities that present themselves According to Delaware law, we aré-hg special stockholders’ meeting” on. Page 3 of 6a gered (Ng 1983 in Wilmington to vote on this proposed : increase in authorized stock. In lieu of attending, you may vote by executing the enclosed proxy card. Your board recommends that you vote in favor of the proposed increase. On August 20, 1983, P received the approval of 458 of its outside stockholders to increase P's authorized: another 11%, gave P the majority approval needed. unless increased its authorized stock in accordance with. stated aS a jaw. Spiegel, a shareholder ot P who had given’ his/ 25, 1983. on September 1, 1963, F commenced an exchange for $00,000 shares of X (then trading at $0/anaie) offering P's newly authorized shares, trading at” 5 days of the offer, P accepted the first 500,001 by a) ended its offer Page 4 of 6seu im sw vuas yu vassarys 14:94 LUE 040 vUUE we . With no further news by October 1, 1983 of a diamond strike by x, X's stock fell to $5/share on October 1, and has remained constant to date. Assuming that no actions were taken other than’ as stated above, analyze the potential vielations only of, the securities laws. If there is a potential violation identify the plaintiff(s), the defendant(s), and the possible damages. what are the major obstacles in = bringing these suits?oarnarys: 1z:38 @uUE veo YUE ope un ene Ir. (20° points) oration is a closely held Delaware azion located in Wilmington, Delaware, whose 1,000 of autnorized stock are solely owned by Jack. Jac, in need of funds, is willing to sell 800 Plain Jack's friend, Jill, gave Jack the name of Amad, 2 wealthy Arab millionaire who lives in N.¥.C. who might de interested in buying Plain stock. Jack telephoned Amad, who said he would bay 100 shares of Plain stock, and would line up seven other friends, all of whom are multi-millionaires, to each buy 100 shares of Plain at $2,000 /snare. Jas comes to you, his attorney, and asks: A. If the deal goes through, does he have to tegister tne sale under the federal securities laws? ~ Why or wny not? 2 3. Assume the deal 1s not registered but should have been, Under what provision(s) of the securities laws could Plain and/or Jack be sued?’ gxplain. TRE BND HAPPY SOMMER Page 6 of &