Chapter 37 - CORPORATIONS -- Securities Regulation and ...



Chapter 29 –Investor Protection and Corporate Governance

Practical Internet Exercise 29-1:

Legal Perspective—Electronic Delivery

Instructions: The Internet has greatly facilitated the ease and speed with which securities transactions can occur. The URL below will take you to a page on the Securities and Exchange Commission’s (SEC’s) Web site that presents interpretive guidelines issued by the SEC on the use of electronic media in transactions governed by federal securities laws.

Visit URL:

SEC Interpretation: Use of Electronic Media



Questions and Answers

Answer the following questions in the fields below.

Question 1: Scroll down to the "Introduction" section of the article below. How many people invest in the U.S. securities markets through online brokerage accounts today? Generally, how has the availability of Internet communications affected the securities industry?

Question 2: According to the SEC, how will its interpretive guidelines, or guidance, facilitate the electronic delivery of communications? How will they reduce the uncertainty regarding permissible Web site content, thus encouraging more widespread information dissemination to investors? How will the guidelines facilitate online offerings?

Question 3: Continue down the page to the next section of the document. When did the SEC first publish its views on the use of electronic media to deliver information to investors? What aspects of electronic communications were addressed in its first two publications on electronic media? According to the SEC, has the framework for electronic delivery established in these publications worked well in today’s technological environment? On what three areas did the SEC focus in these publications?

Question 4: Scan through the remaining sections of this document. Select two sections and summarize the major points within each section.

Practical Internet Exercise 29-2:

Management Perspective—The SEC's Role

Instructions: The Securities and Exchange Commission (SEC) has a major role to play in the protection of investors. The SEC's Web site contains a wealth of information, including news about proposed changes to rules and regulations, information to help assist investors, and information about enforcement actions under the Securities Act of 1933 and the Securities Exchange Act of 1934.

Go to the SEC's Web site. On the right, lower side of the home page, under "Information for:" click on the link for Small Businesses. Then select the link to Q & A: Small Business and the SEC and answer Questions 1–3.

Visit URL:

Securities and Exchange Commission Web Site



Questions and Answers

Answer the following questions in the fields below.

Question 1: Discuss some of the advantages and disadvantages of "going public." Explain the process required for a small business to go public.

Question 2: List the two principal parts of the registration process. Describe the simplified registration Forms SB-1 and SB-2 for use by small business issuers. Define a small business issuer.

Question 3: Discuss some of the legal ways in which firms can offer and sell securities without registering with the SEC.

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