Professional Documents
Culture Documents
Full Entrepreneurial Finance 6Th Edition Leach Test Bank Online PDF All Chapter
Full Entrepreneurial Finance 6Th Edition Leach Test Bank Online PDF All Chapter
https://testbankdeal.com/product/entrepreneurial-finance-6th-
edition-leach-solutions-manual/
https://testbankdeal.com/product/entrepreneurial-finance-5th-
edition-leach-test-bank/
https://testbankdeal.com/product/entrepreneurial-finance-4th-
edition-leach-test-bank/
https://testbankdeal.com/product/entrepreneurial-finance-5th-
edition-leach-solutions-manual/
Entrepreneurial Finance 4th Edition Leach Solutions
Manual
https://testbankdeal.com/product/entrepreneurial-finance-4th-
edition-leach-solutions-manual/
https://testbankdeal.com/product/entrepreneurial-finance-6th-
edition-adelman-test-bank/
https://testbankdeal.com/product/entrepreneurial-finance-6th-
edition-adelman-solutions-manual/
https://testbankdeal.com/product/entrepreneurial-finance-5th-
edition-adelman-test-bank/
https://testbankdeal.com/product/community-nutrition-in-action-
an-entrepreneurial-approach-6th-edition-boyle-test-bank/
CHAPTER 8
T. 1. The securities Exchange act of 1934 provides for the regulation of securities
exchanges and over-the-counter markets.
T. 5. The Securities Act of 1933 is the main body of federal law governing the
creation and sale of securities in the U.S.
F 6. The Securities Exchange Act was passed in 1933 and the Securities Act was
passed in 1934.
F. 7. The trading of securities is regulated under the Securities and Exchange Act
of 1954.
T. 10. Offerings and sales of securities are regulated under the Securities Act of
1933 and state blue-sky laws.
F. 11. Blue-sky laws are federal laws designed to protect individuals from
investing in fraudulent security offerings.
F. 12. The typical business organization for a venture in its rapid-growth stage is
a partnership or LLC.
52
Chapter 8: Securities Law Considerations When Obtaining Venture Financing 53
T. 17. The two basic types of exemptions from having to register securities with
the SEC are security and transaction exemptions.
F. 18. The Securities Act of 1933 provides a very narrow definition as to what
constitutes a security.
T. 19. SEC Rule 147 provides guidance on the issuer’s diligent responsibilities in
assuring that offerees are in-state and that securities don’t move across state
lines.
F. 22. The typical business organization for a venture in its rapid-growth stage is
a partnership or LLC.
F. 23. In SEC v. Ralston Purina (1953), the U.S. Supreme Court took an
important step toward defining a public offering for the purposes of Section
4(2) of the Securities Act of 1933.
F. 24. SEC Regulation D requires the registration of securities with the SEC.
T. 25. An early stage venture that is not an investment company and has written
compensation agreements can structure compensation-related securities issues
so they are exempt from SEC registration requirements.
F. 26. SEC Regulation D took effect in 1932 and provides the basis for “safe
harbor” as a private placement.
F. 27. Rule 504 under Regulation D has a $2 million financing limit (i.e., applies
to sales of securities not exceeding $2 million).
54 Chapter 8: Securities Law Considerations When Obtaining Venture Financing
T. 28. A Rule 504 exemption under Regulation D has no limit in terms of the
number and qualifications of investors.
T. 31. A Regulation D Rule 506 offering has no limit in terms of the dollar
amount of the offering but is limited to 35 unaccredited investors.
T. 34. Regulation A issuers are allowed to “test the waters” before preparing the
offering circular (unlike almost all other security offerings).
F. 35. Regulation A offerings are allowed up $10 million and do not have
limitations on the number or sophistication of offerees.
T. 36. The objective of the Jumpstart Our Business Startups (JOBS) Act of 2012
is to stimulate the initiation, growth, and development of small business
companies.
T. 37. Title II of the JOBS Act of 2012 eliminates the general solicitation and
advertising restriction for Regulation D 506 offerings.
T. 38. Title III of the JOBS Act of 2012 establishes a small offering registration
exemption and calls for SEC rules relating to the sales of securities to an
Internet “crowd” (securities crowdfunding).
F. 5. Rule 503 of Regulation D states that a Form D should be filed with the SEC
within six months after the first sale of securities.
Multiple-Choice Questions
e. 1. Which of the following is not true regarding the Securities Act of 1933?
a. it was passed in response to abuses thought to have contributed to
the financial catastrophes of the Great Depression
b. it covers securities fraud
c. it requires securities to be registered formally with the federal
government
d. it set of the nature and authority of the Securities and Exchange
Commission
e. it focuses on those who provide investment advice
b. 2. The U.S. federal law that impacts the creation and sales of securities is:
a. Securities Exchange Act of 1934
b. Securities Act of 1933
c. Investment Company Act of 1940
d. Investment Advisers Act of 1940
c. 3. The efforts to regulate the trading of securities takes place under which of
the following securities laws?
a. Securities Act of 1933
b. state “blue-sky” laws
c. Securities and Exchange Act of 1934
d. Investment Company Act of 1940
e. Investment Advisers Act of 1940
f. 4. Efforts to regulate the offerings and sales of securities take place under
which of the following securities laws?
a. Securities Act of 1933
b. state “blue-sky” laws
56 Chapter 8: Securities Law Considerations When Obtaining Venture Financing
d. 8. Which of the following is not true about registering securities with the
SEC?
a. it is a time consuming process
b. it required the disclosure of accounting information
c. it is usually done with the help of an investment bank
d. it is an inexpensive process
e. it provides information to prospective investors
b. 10. Ventures that reach their survival stage of their life cycles and seek first-
round financing are typically organized as:
a. proprietorships or partnerships
b. LLCs or corporations
c. corporations
d. partnerships or LLCs
e. proprietorships or corporations
d. 13. The returning of all funds to equity investors as a common “remedy” for a
“fouled up” securities offering is called:
a. just action
b. fraud
c. second round financing
d. a rescission
e. mezzanine financing
e. 14. “Security” exemptions from registration with the SEC include which of
the following:
a. securities issued by banks and thrift institutions
b. government securities
c. intrastate offerings
d. securities issued by large, high quality corporations
e. a, b, and c above
f. a, b, c, and d above
e. 15. The basic types of “transaction” exemptions for registration with the SEC
are:
a. private placement exemption
58 Chapter 8: Securities Law Considerations When Obtaining Venture Financing
a. 16. In the Ninth Circuit Court of Appeals decision on SEC v. Murphy, all of
the following were considerations in determining an offering to be a private
placement except:
a. there must be an arm’s length relationship between the issuer of the
security and the prospective purchaser
b. the number of offerees must be limited
c. the size and the manner of the offering must not indicate
widespread solicitation
d. the offerees must be sophisticated
e. some relationship between the offerees and the issuer must be
present
d. 17. Which SEC Regulation took effect in 1982 and provides the basis for “safe
harbor” as a private placement?
a. Regulation A
b. Regulation B
c. Regulation C
d. Regulation D
e. Regulation E
e. 18. Unless your security is exempted, what Section of the Securities Act of
1933 requires you to file a registration statement with the SEC?
a. Section 1
b. Section 2
c. Section 3
d. Section 4
e. Section 5
e. 19. Which one of the following is not an exemption method for making an
offering exempt from SEC registration?
a. 4(2) private offering
b. accredited investor
c. Regulation D
d. Regulation A
e. Regulation Z
e. 20. Exemptions for private placement offerings and sales of securities in the
amount of $2 million are handled under which one of the follow rules under
Regulation D?
Chapter 8: Securities Law Considerations When Obtaining Venture Financing 59
a. Rule 501
b. Rule 502
c. Rule 503
d. Rule 504
e. Rule 505
b. 21. Which one of the following SEC registration exemptions has a financing
limit in a 12-month period and permits a maximum of 35 unaccredited
investors?
a. Section 4(2)
b. Reg D: Rule 504
c. Reg D: Rule 505
d. Reg D: Rule 506
e. Regulation A
d. 22. Rule 504 of Regulation D limits the total number of investors to:
a. 35
b. 100
c. 35 unaccredited investors and any number of accredited investors
d. there is no limit on the number of accredited or unaccredited
investors
c. 23. Offerings exempted from registration under rule 505 of Regulation D may
raise up to $5 million in a:
a. 6-month period
b. 9-month period
c. 12-month period
d. 18-month period
e. 24-month period
b. 25. Which one of the following “rules” under Regulation D has a $5 million
financing limit?
a. Rule 504
b. Rule 505
c. Rule 506
d. Rule 507
e. Rule 508
60 Chapter 8: Securities Law Considerations When Obtaining Venture Financing
a. 26. While Section 4(2) does not limit the dollar amount of an offering, the
interpretation of the law has stipulated that:
a. the investors must be sophisticated
b the number of investors must be limited to 35
c. the funds must be raised within a 12-month period
d. the offering must be extended to the public, and not only investors
who have a relationship with the issuer
e. 30. Which of the following exemptions involves a public, and not a private,
offering?
a. Section 4(2)
b. Rule 501
c. Rule 505
d. Rule 506
e. Regulation A
e. 32. The JOBS Act of 2012 provides for which of the following:
a. establishes a new business classification called “Emerging Growth
Company”
b. lifts restrictions on general solicitation and advertising for Reg D
506 accredited investor offerings
c. establishes a small offering registration exemption and calls for
SEC rules relating to the sales of securities to an Internet “crowd”
(securities crowdfunding)
d. a and b above
e. a, b, and c
c. 33. Which Title of the JOBS Act of 2012 established a small offering
registration exemption involving the sales of securities to an Internet “crowd?”
a. Title I
b. Title II
c. Title III
d. Title IV
e. Title V
b. 5. Rule 503 dictates that for all Reg D exemptions, a Form D should be filed
within how many days after the first sale of securities?
a. 1 day
b. 15 days
c. 30 days
d. six months
e. one year
On July 1st the last of Foy’s troops on the sea-coast front had
recrossed the lower Bidassoa, leaving Graham and Giron in complete
possession of the Spanish bank, and free to commence the siege of St.
Sebastian. They had 25,000 men in line, without counting Mendizabal’s
Biscayan irregulars, who were observing the fortress, and the 5th British
Division, which was now on its march from Vittoria to the frontier, and
was due to arrive on the 5th or 6th. These forces were amply sufficient
to hold in check Reille, Foy, and the Bayonne Reserve.
On July 1st also Wellington began to arrange his march northward
from Pampeluna, which might have begun on the 26th June if he had
not taken off so many divisions for the fruitless pursuit of Clausel. The
five days’ respite granted to the enemy had been very useful to him. If
the King had been followed up without delay, at the moment when he
had split his army into the three columns, which marched the first by
Yrurzun and Santesteban (Reille), the second by the Col de Velate
(D’Erlon), and the third by the Pass of Roncesvalles (Gazan), it is hard
to say where or how he could have rallied or offered any effective
resistance. Wellington had preferred to take the doubtful chance of
intercepting and destroying a secondary force, rather than to devote
himself to the relentless pursuit of the demoralized main body of the
enemy. But it must be remembered that a resolve to push the chase
after the flying King would have involved an instant invasion of France.
And though on general military grounds a defeated enemy should be
kept on the run and destroyed in detail—like Brunswick’s army after
Jena—there were in June-July 1813 the strongest political reasons to
deter Wellington from crossing the frontier. It was not merely that he had
outmarched his transport, and had not yet got into touch with his new
bases of supply at Santander and on the Biscay coast, so that for the
moment he was a little short of ammunition, and also living on the
country, a practice which he disliked on principle and wished to end as
soon as possible[723]. Nor was his hindrance the fact that his army was
tired and sulky, and that many of his stragglers had not yet rejoined—
though both of these vexations had their weight[724]. Nor was the political
consideration that held him back the deplorable news from Cadiz,
received at Caseda on June 28th, to the effect that the Regency had
deposed Castaños from his office as Captain-General of Galicia,
Estremadura, and both the Castiles, and had superseded his nephew
General Giron in the command of the Fourth Army[725]. This was indeed
a serious blow—not so much because Wellington could always rely on
Castaños, and had found Giron more obedient than most Spanish
officers, but because it looked as if the Cadiz Government was aiming at
an open repudiation of the bargain that had been made in January, by
which they had agreed not to make or revoke appointments of the
military sort without giving notice, and receiving approval. The excuses
given for the changes were paltry and unconvincing—Castaños was
wanted to take his seat in the Council of State—Giron was to be sent,
with large reinforcements, to serve with Copons as second in command
of the Army of Catalonia. Wellington concluded, and rightly, that the real
causes of these attacks on his friends were petty political intrigues—the
‘Liberal’ party in Cadiz was trying to secure its own domination by
evicting those who might be considered ‘Serviles’ or even ‘Moderates’
from positions of power[726]. He had resolved not to bring the relations
between himself and the Regency to a crisis, by making a formal
demand for the restoration of Castaños and Giron to their posts. He
wrote indeed to the Minister of War to say that he considered that he
had been ‘most unworthily treated’ and that there were limits to his
forbearance, but he avoided an open rupture, and waited for the
Regency to take the next step. He wrote, however, to his brother, the
Ambassador at Cadiz, that he ought to call together in private all the
more sensible and sound members of the Cortes, and to warn them of
the pernicious effects of this last move: unless they wished to see him
resign the position of Generalissimo, given him only six months back,
they must bring pressure on their government—‘they have it in their
power to interfere if they still wish that I should retain the command[727].’
But this political trouble, ominous though it might be of friction in the
near future, was not the cause of Wellington’s failure to exploit to the
utmost the effects of the battle of Vittoria. The real hindrance was not the
state of Spanish politics, but the posture of affairs in Central Europe. The
Armistice of Plässwitz had been signed on June 4, and till it came to an
end on August 11 there was a possibility of peace between Napoleon
and his Russian and Prussian enemies, on terms which Great Britain
would be unable to accept. Wellington was sent frequent dispatches by
Lord Bathurst, to keep him abreast of the latest developments in the
Conferences, but inevitably it took a very long time for news from
Saxony to reach London and be transmitted to Spain. Now if Napoleon
should succeed in making a separate peace with the Allies, his first care
would be to evict the British Army, if it should have entered France in
successful pursuit of King Joseph and his demoralized host. Even if it
should have taken Bayonne, crushed the enemy’s field force, and made
good way towards Bordeaux, it would have no chance of standing
against the enormous reserves that could be drawn from Germany, with
the Emperor himself at their head. Therefore it would be better to take
up a good position on the line of the Pyrenees, secured by capturing St.
Sebastian and Pampeluna, than to make an irruption into France,
however brilliant the immediate results of such a move might be. Still
ignorant on July 12 of the tendency of the conferences at Dresden,
Wellington wrote to the Secretary for War: ‘My future operations will
depend a good deal upon what passes in the North of Europe: and if
operations should recommence there, on the strength and description of
the reinforcement which the enemy may get on our front.... I think I can
hold the Pyrenees as easily as I can Portugal. I am quite certain that I
can hold the position which I have got more easily than the Ebro, or any
other line in Spain[728].’ In another letter he explains that he is giving his
army a few days of much needed rest, by the end of which he hopes not
only to have heard of the fall of St. Sebastian, but of the results of the
negotiations in Germany[729]. In a third he puts the matter in the clearest
terms: ‘Much depends upon the state of affairs in the North of Europe. If
the war should be renewed, I should do most good by moving forward
into France, and I should probably be able to establish myself there. If it
is not renewed, I should only go into France to be driven out again. So I
shall do my best to confine myself to securing what I have gained[730].’ In
a fourth he complains that many people, even officers at the front, seem
to think that after driving the French from the frontiers of Portugal to the
Pyrenees, he ought to invade France immediately. ‘Some expect that we
shall be at Paris in a month.’ But though he entertained no doubt that he
could enter France to-morrow, and establish the Army on the Adour, he
could go no farther. For if peace were made by the Allies, he must
necessarily withdraw into Spain, and the retreat, though short, would be
through a difficult country and a hostile population. So from what he
could gather about the progress of negotiations in Germany, he had
determined that it would be unsafe to think of anything in the way of an
invasion of France[731].
Everything therefore at present, and for many weeks to follow,
depended on the news concerning the Armistice. And the happy
intelligence that it had come to an end, and that the war was renewed,
with the Austrians added to the Allied forces, only reached Wellington on
September 7th. The actual declaration of war by Austria took place on
August 11, by which time the situation on the Spanish frontier had
suffered many vicissitudes, for in the last fortnight during which the
Armistice endured, there had taken place Soult’s desperate invasion of
Spain, and all the bloody fighting known as the Battles of the Pyrenees.
Meanwhile we must return to July 1st, on which day Wellington had
already made up his mind that his present programme should be
confined to bringing up his army to the Bidassoa and the Pyrenean
passes, and undertaking the siege of St. Sebastian and the blockade of
Pampeluna. He was still not quite happy about the intentions of Clausel
—he trusted that the French General and his 15,000 men would retire to
France by the pass above Jaca[732]. If he were to remain at Saragossa,
and Suchet were there to join him, a tiresome complication would be
created on his right rear—wherefore he kept sending letters to William
Bentinck, ordering him to keep Suchet busy at all costs, by whatever
means might seem best to him[733]. It was not till July 16th that news
came that this danger had ended in the desired fashion, by Clausel’s
crossing the passes[734]. But whatever might happen in that direction,
there was still one point that had to be settled, before it could be
considered that the allied army was established on a satisfactory line for
defending the Spanish frontier and covering the sieges of St. Sebastian
and Pampeluna. The French were still in possession of the Bastan, the
high-lying valley of the Upper Bidassoa, through which runs the main
road from Pampeluna to Bayonne, by the Col de Velate, and the pass of
Maya. This last corner of Spain must be cleared of the invaders, or the
crest of the Pyrenees was not yet secure. Accordingly arrangements
were made for marching the main body of the British Army to its
destined positions through the Bastan, in order to sweep out the
lingering enemy.
A sufficient corps must be left to blockade Pampeluna: during the
operations against Clausel this duty had been discharged by Hill’s and
Silveira’s and Morillo’s troops. As these units had enjoyed five days’ rest,
while the remainder of the divisions had been marching hard in eastern
Navarre, it was arranged that they should give over the service of the
blockade by sections to the returning columns as each came up.
Wellington intended to transfer the whole affair in the end to a Spanish
force, the ‘Army of Reserve of Andalusia’ under Henry O’Donnell, which
had been occupied for the last week in the siege of the forts of
Pancorbo, after its very tardy arrival in the zone of operations. King
Joseph, when lying at Burgos, had thrown a garrison of 700 men into
these forts, which command the high road to the Ebro, in the vain hope
of incommoding Wellington’s advance. But as the allied army did not
march by the Camino Real at all, but cut across by side routes to Medina
del Pomar, the precaution was useless, and cost the enemy a battalion.
However, it was necessary to clear the defile, in order to open the
easiest line of communication with Madrid, and O’Donnell was directed
to capture the forts on his way north to join the main army. He invested
them on June 25, and stormed the lower and weaker fort of Santa Marta
on the 28th. The upper fort of Santa Engracia was a veritable eagle’s
nest, on a most inaccessible position: O’Donnell succeeded with great
difficulty in getting six guns up to a point on which they could bear on the
work. But the reason why such a strong post surrendered by capitulation
two days later was not the artillery fire, but mainly lack of water, the
castle well having run nearly dry, and partly the news of Vittoria. A small
party of fugitives who had escaped from the field by an incredible détour,
corroborated the claims made by the Spanish general when he
summoned the place, and the commandant (Major Durand of the 55th
Line) surrendered with 650 men, 24 guns, and a good stock of
ammunition on June 30th[735].
On getting these news Wellington, on July 2, ordered O’Donnell to
come up at once, and take over the blockade of Pampeluna, for which
his whole force of 11,000 men would not be too great. For the fortress
was large and strongly garrisoned. The King had brought up the number
of troops left to the Governor-General Cassan[736] to 3,600 men before
leaving the place, and there were over eighty guns mounted on the
walls, though two outlying forts in the plain had been abandoned.
Wellington allowed nine days for the orders to reach O’Donnell, and for
the Army of Reserve to make the long march from Pancorbo to
Pampeluna: as a matter of fact it took eleven. Meanwhile the fortress
had to be contained by troops from the main army, till the Andalusians
should come up—they were due on July 12th. The scheme adopted was
that Hill should collect the 2nd Division and Silveira’s Portuguese[737]—
their usual contingent of auxiliaries—on the north side of Pampeluna on
July 1st, and march on July 2; the ground which he had held being taken
over by the Light 3rd and 7th Divisions, returning from the chase of
Clausel. On the 3rd the 7th Division was to be relieved by the 4th, and to
follow Hill. On the 5th the 6th Division (Clinton) would arrive, and relieve
the Light Division which would follow the 7th. The greater part of the
cavalry was to be left behind in the plains, being obviously useless in the
Pyrenees except in small parties for exploration; but each of the
marching divisions had a regiment attached to it.
The result of these arrangements was to leave three divisions (3rd,
4th, 6th), and nearly all the cavalry, for the blockade of Pampeluna—a
rather larger force than might have been expected[738]. Four divisions
(2nd, Light, 7th, and Silveira’s Portuguese) moved out to clear the
Bastan, and to establish communications with Graham’s corps on the
Lower Bidassoa. If the French had been in good fighting trim, four
divisions would have been none too many for the task, more especially
when it is remembered that they were advancing in three échelons, each
separated from the next by a long day’s march. But Wellington reckoned
that, although he had all Gazan’s and D’Erlon’s troops in front of him—
the presence of Reille’s on the Lower Bidassoa had been reported by
Graham—they would have no artillery (since it had been lost at Vittoria),
would be low in numbers, because they had not yet gathered in their
stragglers, and lower still in morale. His estimate was on the whole
justified, for the operation was successfully carried out; but it did not go
off quite so easily as had been expected. It should be mentioned that, on
the bare chance that the French might make a movement from St. Jean-
Pied-du-Port to disturb the blockade of Pampeluna—an unlikely
possibility—the 2nd Division had detached Byng’s brigade to hold the
pass of Roncesvalles, in conjunction with Morillo’s Spanish division. Hill
therefore, leading the march towards the Bastan, had only three of his
four brigades with him—Cameron’s[739], O’Callaghan’s[740], and
Ashworth’s Portuguese. The total of the marching column, from front to
rear, was about 22,000 men.
To understand the task set before Hill’s corps it is necessary to go
back to the arrangements—if arrangements they can be called, for they