Practice Test Geeks(CEP) Certified Equity Professional Practice Test
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Regulatory Compliance & Standards Flashcards

7 cards from real CEP practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.

Read the first 7 Regulatory Compliance & Standards flashcards as text

  1. A company's stock option plan must be registered with the SEC if shares to be issued under the plan exceed the threshold requiring registration. Which form is commonly used for registering employee benefit plan securities?

    Answer: Form S-8

    Form S-8 is the SEC registration form specifically designed for securities to be issued pursuant to employee benefit plans, including stock option and ESPP plans.

  2. Under FASB ASC 718, a performance condition that affects vesting but is not a market condition should be:

    Answer: Excluded from the grant-date fair value but reflected in the number of awards expected to vest

    Performance conditions are excluded from fair value at grant date; instead, compensation cost is recognized only for the number of awards that are probable of vesting based on the performance outcome.

  3. Section 16 of the Securities Exchange Act defines an 'insider' as a director, officer, or beneficial owner of more than what percentage of a class of registered equity securities?

    Answer: 10%

    Section 16 applies to directors, officers, and persons who beneficially own more than 10% of any class of registered equity security of the company.

  4. Under the SEC's Regulation FD, what must a company do if it unintentionally discloses material nonpublic information to a securities professional?

    Answer: Make public disclosure promptly, generally within 24 hours

    Regulation FD requires the company to promptly make public disclosure (within 24 hours or before the next trading day opens) following an unintentional selective disclosure.

  5. A restricted stock award (RSA) with an 83(b) election results in taxation:

    Answer: At the time of grant, based on the fair market value of the shares

    An 83(b) election causes the employee to recognize ordinary income at grant based on the fair market value at that time, and any subsequent appreciation is taxed at capital gains rates.

  6. Which SEC rule establishes the affirmative defense allowing corporate insiders to trade during blackout periods if a pre-established trading plan is in place?

    Answer: Rule 10b5-1

    Rule 10b5-1 provides an affirmative defense against insider trading liability for trades executed pursuant to a pre-established plan adopted when the insider did not possess MNPI.

  7. Under NYSE and NASDAQ listing standards, equity compensation plans generally must be approved by shareholders EXCEPT when:

    Answer: The plan is used solely for new hires or acquisitions and meets specific exemption criteria

    Inducement awards for new hires and awards assumed in acquisitions may qualify for shareholder approval exemptions under exchange listing rules, subject to specific conditions.