Government Protections Against Stock Market Abuses


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An investment company is desperate to receive more funds. They have tried to completely rebrand their company with a new advertising strategy which describes them as the Best long-term investment out there, despite the fact that their projections show that they will go out of business in 3 years. They have also falsified several of their financial documents to make it seem like they are making more than they actually are. Identify the example of fraudulent accounting from the above scenario:

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1. Why was the Sarbanes-Oxley Act useful in combating fraudulent accounting?

2. What is it called when a person has access to confidential information about a company's financial situation and uses this information to buy or sell stock?

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About This Quiz & Worksheet

This quiz and corresponding worksheet will help you gauge your knowledge of the regulations against abuses in the stock market. Topics covered include falsifying an accounting document and the act establishing new standards for corporate accountability.

Quiz & Worksheet Goals

Use this printable worksheet and quiz to review:

  • Act establishing new standards for corporate accountability
  • Access to confidential information about a company
  • Meaning of the acronym SEC
  • When the SEC was formed

Skills Practiced

  • Interpreting information - verify you can review information regarding the act establishing new standards for corporate accountability and interpret it correctly
  • Knowledge application - use your knowledge to identify when the SEC was formed
  • Lesson comprehension - ensure that you draw the most important information from the related business ethics lesson

Additional Learning

To learn more about our protection from big companies, review the corresponding lesson titled Government Protections Against Stock Market Abuses. This lesson will help you:

  • Understand why companies need to be monitored
  • Identify the mission of the SEC
  • Describe how the SEC accomplishes its mission
  • Appreciate the major financial crises to which the SEC has responded
  • Know why the Sarbanes-Oxley Act was passed