MGT 340 Test 3

Initial Public Offering - when a company offers stock in the public market place for the first time.

Offering to potential investors amongst several states.
Federal Law

Offering to potential investors within a state.
State Law

Investment of money in a common enterprise, with the expectation of profit generated by the efforts of others.
Called the Howie Test.
Ex: Share of stock, warrant

To eliminate fraudulent conduct in the marketplace
to give investors full disclosure
prohibits interstate offerings until they file registration statement with SEC

Prospectus
Supplemental Information

General Information (Industry information, business plan, product quality plan)
Risk Assessment
Audited Financial Information (BS, IS Stmnt. of CF)

Goes to potential offeree

Cost of IPO
Any major pending contracts

Goes to SEC

Prefiling Period - no solicitation, no sales
Waiting Period - no sales, limited solicitation; tombstone ad, red haring prospectus
Post effective period - sales, and solicitation; all potential investors get a copy of final prospects

Exempt securities
Exempt Transactions

government securities, charities, educational institutions, financial institutions

Intrastate offering, minor offering

Promote full disclosure

Traded on national exchange
or
More than $10,000,000 in assets AND over 500 shareholders

Every year, file form 10K (similar to registration statement)
Every quarter, file form 10Q (financial information)
If material event, file form 8K

Civil Liability
SEC
Criminal Prosecution

sued by potential investors.
issuer, underwriter, accountants, and bankers can all be sued by potential investors.

fines up to 300%
officers/directors can be fired from any publicly traded company again
suspend trading of stock

SEC works with justice system
fines up to $225,000
25 years in prison
prosecute FRAUD, not mistakes or incompetence

Intrastate
Blue Sky Laws

crimes committed for or against a business

greed, money, pressure to meet expectations, personal pressure, opportunity

increased security, increase in insurance premiums, stiffer regulations

personal knowledge - anyone who knew or should have known what was going on

Conform conduct, incentives
Fines - percentage of net earnings, holding officers and directors responsible

monitors company
shame punishment

did company cooperate with authorities?
did they admit guilt?
pay restitution?
did they have a code of ethics? internal controls?
etc.

Actus Reus - Requirement of some sort of specific action/conduct
Mens Rea - required state of mind or intent to commit the crime; accident or oversight is not criminal

Theft and Embezzlement
Obstruction of Justice
Computer Crimes

Violating a position of trust

Altering or destroying documents that are subject of investigation
encouraging some else to do it
encouraging or giving false testimony

unreasonable search and seizure
protection from government
people and business have 4th amendment protection

Home
Person

Not trash

If you give consent
It is in plain view
Search incident to arrest

Fruit of the poisonous tree
any evidence obtained without 4th amendment right is dismissed

Self Incrimination
Confessions
Miranda

defendant does not have to testify against themselves
not for businesses, only natural people

Crime control - prosecution says you won't admit guilt if you're innocent
Due process - defense says you should look at the circumstances of confession

Physical/Psychological - Intelligence, experience with police department, use of drugs/alcohol, emotional stability, deprivation of food and sleep, financial well being, etc.
Police Interrogation Tactics - deals, threats, violence, trickery, deceit prolonged interrogation, medical examinations

Judge
just because some factors are present does not mean it was involuntary

Anybody in custody gets it
before interrogation
given if you're not allowed to leave, don't have to be "booked"
covers everyone, can be invoked at anytime
failure to give Miranda - statements are dismissed or anything that is later found because of the statements

Right to counsel
Right to a speedy trial

right when under interrogation
right once judicial proceedings have begun

Excessive Bail - set by statutes
Cruel and unusual punishment

Charge
Arraignment
Discovery
Motions
Plea/Dismiss
Trial
Formal Sentencing

Complaint
Arrest

1st official appearance in court
formally told the charges against you
plea guilty or not guilty
appoint counsel

exchange of information

ask for suppression hearing
throw out evidence (amendment violation)
no jury

plea - no amendment violation
dismiss - throw out evidence

Voir Dire
Burden - beyond a reasonable doubt (Prosecution)
Bifurcated - guilt phase; Penalty phase - jury's opinion
Double Jeopardy

4-6 weeks after trial

some type of interference with someone or their property that results in injury to that person or their property.
Civil wrong that does not come through a breach of contract

to make injured party whole again

punitive damages

intentional
negligence
strict liability

Defamation
Contract Interference
False Imprisonment
IIED
Invasion of Privacy
Civil Battery
Civil Assault

deliberate action or voluntary act that harms a protected interest

a false statement that is published to a 3rd party that causes harm
Slander - spoken
Libel - written

it was the truth
opinion and analysis
privileged speech

intentionally persuaded another to break a contract already in existence

Intentionally detaining a person against his/her will for any period of time

Intentional Infliction of Emotional Distress
imposes liability for conduct that goes beyond all bounds of decency and results in emotional distress to the victim

Intentionally touching another in a harmful or offensive way without legal justification or consent.
Spitting on someone or blowing smoke in their face

Incomplete battery
intentionally causing another to believe they are about to be the victim of battery

Harm caused by accident, usually carelessness
bulk of torts
most circumstantial

Duty - act reasonably/prudently
Breach - act/failure to act
Causation - causal link between victims injury/damage and the act or failure to act of the defendant
Damages/Injury

Contributory negligence - most abolished; was plaintiff somewhat responsible for injury.
Comparative negligence - carelessness; what percent of responsibility is plaintiff fault?
Assumption of the risk - consent; plaintiff knows potential risk or danger and proceeded anyway; voluntary assumption of risk

For: reduce frivolous lawsuits, reduce insurance premiums
Against: decrease consumer protection

Ex of Tort Reform: placing caps on tort reward

Def - hold someone responsible for harm without proof of carelessness.
absolute liability for conduct
inherently dangerous material

branch of law governing litigation from harm caused by defective products

let the buyer beware
consumers responsibility to stay away from bad products
pro business

only consumers in privity could recover; only purchaser can sue seller; not any others injured; only seller/manufacturer was responsible for defect

Promises quality, performance, ability; has to be verifiable facts
can be expressed orally or written
Includes the opinion of experts

Regulatory agency designed to: prevent unfair and deceptive trade practices

Content - prices cannot be inflated to cover markdowns
Performance - supported by reliable studies
Celebrity enforcements - have to have used the product, give their own opinion or disclose if not
Bait and Switch
Product comparisons - results compared by reliable study. needs to be administered

Fines
Run corrective ads
injunction - stop ads
reimburse consumers

created by operation of law
Implied warranty of merchantability
Implied warranty for a particular purpose

goods are fit for ordinary purposes; fair and average quality

purchase from a seller of goods
Requirements
a seller has skill in the use of the goods in question
buyer is relying on sellers skill
seller knows buyer is relying on sellers skill
seller makes a recommendation to the buyer

Express warranty cannot be disclaimed
implied warranty - label good "as is" or "with all faults"

bulk of products liability cases
must have all elements (duty, breach, causation, damages)

condition of product
covers most people involved (manufacturers, sellers, etc)

misuse of a product (non-foreseeable misuse)
comparative negligence - portion fault
assumption of the risk

design defects
lack of warning
handling/packaging defects

set standards for consumer products
regulatory agency; fan fine, force recalls, record keeping

negative externality

self - companies/people going above and beyond regulations
government - make laws, give tax credits

cost-benefit analysis
impact on future
proving causation
who will pay for protection?
politics

when activities of one landowner interferes with another landowners use and enjoyment of their property
smells, pollution, noise
goal is to remove interference, not money

not in my backyard
build absolutely nothing anywhere near anything

air pollution
water pollution
solid waste disposal
NEPA of 1969

clean air act
EPA sets standards for air quality
goal - reduce airborne pollutants
penalty - fine up to $25,000/day; up to 15 years in prison, fines up to 1 million dollars

clean water act - transfer from state to federal control; set range of discharge into waterways - EPA
safe drinking water act - EPA established standards for drinking water; state enforces but EPA sets the minimum standards
Oil pollution act

toxic substances control act - EPA sets standard for managing/use/disposal of toxic substances

National Environmental Policy Act
government general commitment to a clean and healthy environment
environmental impact statement - anytime federal government engaging in an act or passing a law that has a substantial impact on environment, must complete EIS

impact it has on environment
adverse affects on environment
measures taken to make consequences less significant
alternatives considered
resources

civil fines - injunction relief (start/stop an action); lawsuits
criminal - repeated and willful violations (jail time, fines)