• You do not need to write out the questions. However, you must write out your responses in complete sentences. Please be very thorough and detailed. This is your opportunity to "show-off" what you learned this week.
• Chapter 28:
  • Question 28-1 Registration Requirements. Estrada Hermanos, Inc., a corporation incorporated and doing business in Florida, decides to sell $1 million worth of its common stock to the public. The stock will be sold only within the state of Florida. Jos Estrada, the chair of the board, says the offering need not be registered with the Securities and Exchange Commission. His brother, Gustavo, disagrees. Who is right? Explain. (See The Securities Act of 1933.)
  • Question 28-3 Insider Trading. David Gain was the chief executive officer (CEO) of Forest Media Corporation, which became interested in acquiring RS Communications, Inc. To initiate negotiations, Gain met with RSs CEO, Gill Raz, on Friday, July 12. Two days later, Gain phoned his brother Mark, who bought 3,800 shares of RS stock on the following Monday. Mark discussed the deal with their father, Jordan, who bought 20,000 RS shares on Thursday. On July 25, the day before the RS bid was due, Gain phoned his parents home, and Mark bought another 3,200 RS shares. The same routine was followed over the next few days, with Gain periodically phoning Mark or Jordan, both of whom continued to buy RS shares. Forests bid was refused, but on August 5, RS announced its merger with another company. The price of RS stock rose 30 percent, increasing the value of Marks and Jordans shares by $664,024 and $412,875, respectively. Did Gain engage in insider trading? What is required to impose sanctions for this offense? Could a court hold Gain liable? Why or why not? (See The Securities Exchange Act of 1934.)