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- Sample Securities Regulation Exam
Prog Aecboe-
1.0: BAe
From: orlan M. Johnsono4/14/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 6a 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
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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
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