Person ML told person M and PK regarding a trading program that will help in purchase and sell securities. ML informed that the securities were insured as well as controlled and monitored by the Federal Reserve. Person M and PK without confirming the existence of program start to sell interest in the program to investors. The investors were assured an extraordinary rate of return from 10 percent to 100 percent for the investment of $ 1 million without any risk. The investors were told that the banks will be utilized to ensure the full bank integrity of the transaction. The transaction was made in harmony with the international banking protocol and rules which guaranteed maximum security to the capital placement of the funder. The program raised $ 23million from twenty-two investors. The investors were not receiving any gain and the amount was used for personal spending. To explain: The requirement to establish the violation of SEC rules.

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Chapter 28, Problem 9BCP

(a)

Summary Introduction

Case summary:Person ML told person M and PK regarding a trading program that will help in purchase and sell securities. ML informed that the securities were insured as well as controlled and monitored by the Federal Reserve. Person M and PK without confirming the existence of program start to sell interest in the program to investors. The investors were assured an extraordinary rate of return from 10 percent to 100 percent for the investment of $1 million without any risk. The investors were told that the banks will be utilized to ensure the full bank integrity of the transaction. The transaction was made in harmony with the international banking protocol and rules which guaranteed maximum security to the capital placement of the funder. The program raised $ 23million from twenty-two investors. The investors were not receiving any gain and the amount was used for personal spending.

To explain: The requirement to establish the violation of SEC rules.

(b)

Summary Introduction

Case summary:Person ML told person M and PK regarding a trading program that will help in purchase and sell securities. ML informed that the securities were insured as well as controlled and monitored by the Federal Reserve. Person M and PK without confirming the existence of program start to sell interest in the program to investors. The investors were assured an extraordinary rate of return from 10 percent to 100 percent for the investment of $1 million without any risk. The investors were told that the banks will be utilized to ensure the full bank integrity of the transaction. The transaction was made in harmony with the international banking protocol and rules which guaranteed maximum security to the capital placement of the funder. The program raised $ 23million from twenty-two investors. The investors were not receiving any gain and the amount was used for personal spending.

To explain:The responsibility of investors for the loss.

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