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Chapter 14 Securities Laws

Chapter 14 Securities Laws. 1933 Act: Exempt Transactions. 1934 Securities Act. The Anti-Fraud Provision 10(b) and Regulation 10(b)-5 Failure to give information or giving overly pessimistic information results in violation

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Chapter 14 Securities Laws

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  1. Chapter 14 Securities Laws

  2. 1933 Act: Exempt Transactions

  3. 1934 Securities Act • The Anti-Fraud Provision 10(b) and Regulation 10(b)-5 • Failure to give information or giving overly pessimistic information results in violation • Examples: Failure to disclose pending merger—Texas Gulf Sulphur’s failure to disclose a rich mineral strike

  4. CEO Angelo Mozilo, CountrywideAugust 23, 2007 “An analyst report suggesting that Countrywide faced liquidity problems was totally irresponsible and baseless. On the contrary, everyone of these crises you come out of stronger, better, and with less competition.”

  5. Daniel Mudd, CEO, Fannie MaeFebruary 27, 2008 “There are no current plans to go back to the market for capital because we have all of those other levers that are turned on, producing capital, putting us into an increasingly – into a comfortable position based on where we are in the market right now.”

  6. Daniel Mudd, CEO, Fannie MaeMay 6, 2008 “We will go into the belly of this cycle with about $48 billion in core capital, which is about $17 billion above our statutory capital level.”

  7. Richard Fuld, CEO, LehmanSept. 10, 2008 “We are on the right track to put these last two quarters behind us.”

  8. Ian Lowitt, CFOLehman, Sept. 10, 2008 “Our liquidity pool also remains strong at $42 billion . . . Throughout the market volatility of the past six months, our liquidity and funding framework has served us extremely well, and we remain focused on increasing the funding available in our bank entities and mitigating any liquidity risks to our secured and unsecured funding positions.”

  9. AIG CEP Martin Sullivan Dec. 5, 2007 “We are confident in our marks and the reasonableness of our valuation methods. We have a high degree of certainty in what we have booked to date.” External auditors issued a warning on November 28, 2007 that they have found “material weaknesses” in AIG’s accounting

  10. Jeffrey N. Edwards, CFO, MerrillJuly 17, 2007 “I think proactive aggressive risk management has put us in an exceptionally good position . . . We have seen significant reductions in our exposure to lower-rated segments of the market.”

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