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ACT 450 Colorado State University Legislation against Fraud and Financial Misstatement Paper

ACT 450 Colorado State University Legislation against Fraud and Financial Misstatement Paper.

**Professor is very tough in grading. She took couple points off for grammar, mechanics, and APA details which I never had experienced in the past in other courses**

**Also, I must have this by the end of Saturday due to personal commitment.**

Option #2: Legal Liability and Public Offerings

Cena Corporation raised $7 million by making a private interstate offering of $4 million in common stock and negotiating a $3 million loan from Regional Bank in order to expand its operations. The common stock was properly offered pursuant to securities rules, so the 1933 Act doesn’t apply, but the antifraud provisions of the Federal Securities Acts does apply.

Cena engaged Salmon, CPAs to audit their financial statements. Salmon knew that the only reason for such an audit was so for the audited financial statements to provide to Regional Bank and the buyers of the common stock. Although Salmon conducted the audit in compliance with its audit program, they failed to detect material fraud committed by Cena’s president. Salmon did not notice the embezzlement because of its unintentional failure to exercise due care in designing its audit for this engagement.

Salmon rendered an unqualified audit opinion on Cena’s financial statements after completion of the audit. Purchasers of the common stock relied on the financial statements in deciding whether to purchase the shares. Based on the audited financial statements, Regional Bank approved the loan to Cena. He was then involuntarily petitioned into bankruptcy in a 60 days window after selling the common stock and attaining the loan from Regional Bank. Cena became insolvent and defaulted on its loan to Regional Bank due to the president’s embezzlement. This caused the common stock to be virtually worthless. The purchasers of the common stock have taken actions against Salmon for damages citing the Securities Exchange Act of 1934 and Regional Bank as a result of Salmon’s negligence.

Required:

  1. Explain the merits of the actions commenced against Salmon by the common stock purchasers and by Regional Bank. What are the likely outcomes? Explain.
  2. What if the purchasers of the common stock were able to bring suit under the 1933 Act and client filed a registration statement initially? How would you answer differ from the previous question? Explain.
  3. What are the differences between the Securities Exchange Acts of 1933 and 1934?

Your written response paper should be 3-4 pages in length. Please type your assignment in a Word document and follow APA format, according to CSU-Global Guide to Writing and APA (Links to an external site.). Include a title page and reference page. Use two (2) outside academic sources other than the textbook, course materials, or other information provided as part of the course materials.

Rubric

ACT450 Mod 2 CT

ACT450 Mod 2 CT

Criteria Ratings Pts

This criterion is linked to a Learning OutcomeRequirements

20.0 to >16.0 pts

Meets Expectation

Includes all of the required components, as specified in the assignment.

16.0 to >12.0 pts

Approaches Expectation

Includes most of the required components, as specified in the assignment.

12.0 to >8.0 pts

Below Expectation

Includes some of the required components, as specified in the assignment.

8.0 to >0 pts

Limited Evidence

Includes few of the required components, as specified in the assignment.

20.0 pts

This criterion is linked to a Learning OutcomeContent

20.0 to >16.0 pts

Meets Expectation

Demonstrates strong or adequate knowledge of professional conduct or legal liability; correctly represents knowledge from the readings and sources.

16.0 to >12.0 pts

Approaches Expectation

Some significant but not major errors or omissions in demonstration of knowledge.

12.0 to >8.0 pts

Below Expectation

Major errors or omissions in demonstration of knowledge.

8.0 to >0 pts

Limited Evidence

Fails to demonstrate knowledge of the materials.

20.0 pts

This criterion is linked to a Learning OutcomeAnalysis

5.0 to >4.0 pts

Meets Expectation

Provides strong or adequate thought, insight and analysis of concepts and applications.

4.0 to >3.0 pts

Approaches Expectation

Some significant but not major errors or omissions in thought, insight and analysis.

3.0 to >2.0 pts

Below Expectation

Major errors or omissions in thought, insight and analysis.

2.0 to >0 pts

Limited Evidence

Fails to demonstrate thought, insight and analysis.

5.0 pts

This criterion is linked to a Learning OutcomeSources / Examples

5.0 to >4.0 pts

Meets Expectation

Sources or examples meet required criteria and are well chosen to provide substance and perspectives on the issue under examination.

4.0 to >3.0 pts

Approaches Expectation

Sources or examples meet required criteria but are less‐than adequately chosen to provide substance and perspectives on the issue under examination.

3.0 to >2.0 pts

Below Expectation

Sources or examples meet required criteria and are poorly chosen to provide substance and perspectives on the issue under examination.

2.0 to >0 pts

Limited Evidence

Source or example selection and integration of knowledge from the course is clearly deficient.

5.0 pts

This criterion is linked to a Learning OutcomeDemonstrates college-level proficiency in organization, grammar and style.

5.0 to >4.0 pts

Meets Expectation

Project is clearly organized, well written, and in proper format as outlined in the assignment. Strong sentence and paragraph structure; few errors in grammar and spelling.

4.0 to >3.0 pts

Approaches Expectation

Project is fairly well organized and written, and is in proper format as outlined in the assignment. Reasonably good sentence and paragraph structure; significant number of errors in grammar and spelling.

3.0 to >2.0 pts

Below Expectation

Project is poorly organized; does not follow proper paper format. Inconsistent to inadequate sentence and paragraph development; numerous errors in grammar and spelling.

2.0 to >0 pts

Limited Evidence

Project is not organized or well written, and is not in proper paper format. Poor quality work; unacceptable in terms of grammar and spelling.

5.0 pts

This criterion is linked to a Learning OutcomeDemonstrates proper use of APA style

5.0 to >4.0 pts

Meets Expectation

Project contains proper APA formatting, according to the CSU-Global Guide to Writing and APA, with no more than one significant error.

4.0 to >3.0 pts

Approaches Expectation

Few errors in APA formatting, according to the CSU-Global Guide to Writing and APA, with no more than two to three significant errors.

3.0 to >2.0 pts

Below Expectation

Significant errors in APA formatting, according to the CSU-Global Guide to Writing and APA, with four to five significant errors.

2.0 to >0 pts

Limited Evidence

Numerous errors in APA formatting, according to the CSU-Global Guide to Writing and APA, with more than five significant errors.

5.0 pts

Total Points: 60.0

ACT 450 Colorado State University Legislation against Fraud and Financial Misstatement Paper

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