This essay will explain the following four questions. First, would registration with the SEC be required for Dakota Gasworks securities? Second, Did Emerson violate Section 10(b) of the Securities Exchange Act of 1934 and SEC Rule 10b-5? Third what theory or theories might a court use to hold Wallace liable for insider trading? Finally, under the Sarbanes-Oxley Act of 2002, who would be required to certify the accuracy of financial statements filed with the SEC? Would registration with the SEC be required for Dakota Gasworks securities? Why or why not? Reliant Energy has registered securities and faces a takeover attempt, or third party tender offer, then the SEC’s tender offer rules will apply to the transaction. The filings required by these rules provide information to the public about the person making the tender offer.
The company, Dakota Gasworks, is experiencing the takeover so they must file with the SEC its responses to the tender offer. These rules set time limits for the tender offer and provide some protection to shareholders. Did Emerson violate Section 10(b) of the Securities Exchange Act of 1934 and SEC Rule 10b-5? Why or why not? Moreover, Emerson did violate rule 10b-5 of the Securities exchange act, in where it protects against insider trading; which is the purchase or sale by person with access to information not available to those whom with those they deal or general traders. The person passing the information of the takeover, Emerson, violated this rule by passing information that wasn’t regularly available to general traders.
What theory or theories might a court use to hold Wallace liable for insider trading? Furthermore, the theory behind the prohibiting insider trading is that is undermines investor confidence in the fairness and integrity of the securities markets. The SEC claims that finding and prosecuting insider trading violations is one of its enforcement priorities, and all investors need to be aware of the danger in trading from spoken knowledge that is not publicly known to people who base their trading on this information.
Under the Sarbanes-Oxley Act of 2002, who would be required to certify the accuracy of financial statements filed with the SEC? Finally, the intent of the Sarbanes-Oxley Act is to protect investors by improving the accuracy and reliability of corporate disclosures made pursuant to the securities laws, and for other purposes. The Act requires all financial reports to include an internal control report. This is designed to show that not only are the company’s financial data accurate, but the company has confidence in them because adequate controls are in place to safeguard financial data.
Year-end financial reports must contain an assessment of the effectiveness of the internal controls. The issuer’s auditing firm is required to attest to that assessment. The auditing firm does this after reviewing controls, policies, and procedures during a Section 4040 audit, conducted along with a traditional financial audit. Under Sarbanes-Oxley Act of 2002, the CEO and CFO of public companies are required to certify the accuracy of financial statements filed with the SEC.
1. Miller, Roger & Jentz, Gaylord (2010) Fundamentals of Business Law: Summarized Cases 8th Edition, Cengage Learning. 2. The Sarbanes-Oxley Act 2002. (n.d.). The Sarbanes-Oxley Act 2002. Retrieved December 19, 2012 from http://www.soxlaw.com/