What is insider trading and why is it forbidden?

What is insider trading and why is it forbidden?

. 1. What is insider trading and why is it forbidden? (5 points).Insider trading refers to the buying and selling of a company’s stock with knowledge that couldonly be known by someone who works “inside” the company. Usually this is done by anemployee. However, employees are required to report significant trades they make with theshares of their own company, so there is a watchdog. For example, Martha Stewart’s friendrealized that the price of his company’s stock was going to drop, so he warned Martha to sell hershares. That landed Martha Stewart in federal prison. When an employee buys or sells stock forthe company he works for, an inside trade has occurred. Its a common strategy that happensfrequently, according to the Securities and Exchange Commission (SEC). The strategy wascreated on fairness. If someone has the ability to get information for a company that isntavailable to everyone else trading on the market gives the insider an advantage. The concept iscreated on fairness; having information that isn’t available to everyone else trading on the marketgives the insider, well, an inside advantage. Section 10b5 of the Securities Exchange Act of 1934defines precisely what constitutes illegal insider trading.Q. 2. What certification requirements does the Sarbanes-Oxley Act impose on corporateexecutives? (5 points)The route of the Sarbanes-Oxley Act and actions by the U. S. Securities and Exchange Commissionimposed new requirements on auditors, corporate boards and management. The Board must adopt anaudit standard to implement the internal control review required by section 404(b). This standard mustrequire the auditor evaluate whether the internal control structure and procedures include records thatprecisely and fairly reflect the transactions of the issuer, provide sensible assurance that the transactionsare recorded in a manner that will permit the preparation of financial statements in accordance withgenerally accepted accounting principles (GAAP), and a description of any material weaknessesin the internal controls.The Act’s provisions ensures that corporate executives are kept on their toes as they have to makeperiodic certifications that: The signing officers have reviewed the report The report does not contain any material untrue statements or material omission or be consideredmisleading The financial statements and related information fairly present the financial condition and the results inall material respects The signing officers are responsible for internal controls and have evaluated these internal controlswithin the previous ninety days and have reported on their findings A list of all deficiencies in the internal controls and information on any fraud that involves employees whoare involved with internal activities Any significant changes in internal controls or related factors that could have a negative impact on theinternal controlsQ. 3. What are the four major provisions of the Clayton Act and what types of activities do theseprovisions prohibit? List all four and describe the activities each prohibits (8 pts total) An Act tosupplement existing laws against unlawful restraints and monopolies, and for other purposes. Beit enacted by the Senate and House of Representatives of the United States of America inCongress assembled, That antitrust laws, as used herein, includes the Act entitled An Act toAdrian GarciaBusiness Law II4/10/14protect trade and commerce against unlawful restraints and monopolies, approved July second,eighteen hundred and ninety; sections seventy-three to seventy-seven, inclusive, of an Actentitled An Act to reduce taxation, to provide revenue for the Government, and for otherpurposes, of August twenty-seventh, eighteen hundred and ninety-four; an Act entitled An Actto amend sections seventy-three and seventy-six of the Act of August twenty-seventh, eighteenhundred and ninety-four, entitled An Act to reduce taxation, to provide revenue for theGovernment, and for other purposes, approved February twelfth, nineteen hundred andthirteen; and also this Act.Commerce, as used herein, means trade or commerce among the several States and withforeign nations, or between the District of Columbia or any Territory of the United States andany State, Territory, or foreign nation, or between any insular possessions or other places underthe jurisdiction of the United States, or between any such possession or place and any State orTerritory of the United States or the District of Columbia or any foreign nation, or within theDistrict of Columbia or any Territory or any insular possession or other place under thejurisdiction of the United States: Provided, That nothing in this Act contained shall apply to thePhilippine Islands.The word person or persons wherever used in this Act shall be deemed to includecorporations and associations existing under or authorized by the laws of either the UnitedStates, the laws of any of the Territories, the laws of any State, or the laws of any foreigncountry.Section 2. That it shall be unlawful for any person engaged in commerce, in the course of suchcommerce, either directly or indirectly to discriminate in price between different purchasers ofcommodities, which commodities are sold for use, consumption, or resale within the UnitedStates or any Territory thereof or the District of Columbia or any insular possession or otherplace under the jurisdiction of the United States, where the effect of such discrimination may beto substantially lessen competition or tend to create a monopoly in any line of commerce:Provided, That nothing herein contained shall prevent discrimination in price between purchasersof commodities on account of differences in the grade, quality, or quantity of the commoditysold, or that makes only due allowance for difference in the cost of selling or transportation, ordiscrimination in price in the same or different communities made in good faith to meetcompetition: And provided further, That nothing herein contained shall prevent persons engagedin selling goods, wares, or merchandise in commerce from selecting their own customers in bonafide transactions and not in restraint of trade.Section 3. That it shall be unlawful for any person engaged in commerce, in the course of suchcommerce, to lease or make a sale or contract for sale of goods, wares, merchandise, machinery,supplies or other commodities, whether patented or unpatented, for use, consumption or resalewithin the United States or any Territory thereof or the District of Columbia or any insularpossession or other place under the jurisdiction of the United States, or fix a price chargedtherefor, or discount from, or rebate upon, such price, on the condition, agreement orunderstanding that the lessee or purchaser thereof shall not use or deal in the goods, wares,merchandise, machinery, supplies or other commodities of a competitor or competitors of thelessor or seller, where the effect of such lease, sale, or contract for sale or such condition,agreement or understanding may be to substantially lessen competition or tend to create amonopoly in any line of commerce.Adrian GarciaBusiness Law II4/10/14Section 4. That any person who shall be injured in his business or property by reason of anythingforbidden in the antitrust laws may sue therefor in any district court of the United States in thedistrict in which the defendant resides or is found or has an agent, without respect to the amountin controversy, and shall recover threefold the damages by him sustained, and the cost of suit,including a reasonable attorneys fee.Q. 4. What agencies of the federal government enforce the federal antitrust laws? (2 points)3 paragraphsIn the U.S. you have a variety of agencies (both federal and state) which play a role in theenforcement of antitrust laws.Both the FTC and the U.S. Department of Justice (DOJ) Antitrust Division enforce the federalantitrust laws. In some respects their authorities overlap, but in practice the two agenciescomplement each other. Over the years, the agencies have developed expertise in particularindustries or markets. For example, the FTC devotes most of its resources to certain segments ofthe economy, including those where consumer spending is high: health care, pharmaceuticals,professional services, food, energy, and certain high-tech industries like computer technologyand Internet services. Before opening an investigation, the agencies consult with one another toavoid duplicating efforts. In this guide, “the agency” means either the FTC or DOJ, whichever isconducting the antitrust investigation.Q. 5. Super Sweet Soda is engaged in the soft-drink bottling and distribution industry in thestates of New York and New Jersey. The firm currently has about 40 percent of the market forthese products and related services. Carbonate Distribution Corporation competes with SuperSweet Soda in the same states. Carbonate has about 35 percent of the market. If Super SweetSoda were to acquire the stock and assets of Carbonate through a horizontal merger, would SuperSweet Soda be in violation of any of the antitrust laws? If so, which one? Discuss fully. (10points)Yes they would definitely be in violation of the antitrust laws. They would be violation of theFederal law known as the Clayton Act, which specifically prohibits these kind of mergers fromhappening. This is because such a market environment would create a market as they wouldaquire more than 50% of the market in their sector. Under the Clayton Act courts have the powerto stop these sort of business affairs or mergers from ever occurring and perhaps even fine them asubstantial amount for these illegal practices. These fines can go as high as $100 million forcorporations in our case.Since these companies also deal within New York then they would also be in violation of theDonnelly Act, sections 340-347, which specifically prohibits these kind of monopolies of themarket. The penalties for corporations in our case can go as high as $1,000,000.Adrian GarciaBusiness Law II4/10/14Q. 6. When will advertising be deemed deceptive? (5 points)Advertising that makes false claims or misleading statements, as well as advertising that createsa false impression. If retailers systematically advertise merchandise at low prices to getcustomers into their stores and then fail to have the merchandise, they are guilty of deceptiveadvertising. Deceptive practices can take many other forms as well, such as false promises,unsubstantiated claims, incomplete descriptions, false testimonials or comparisons, small-printqualifications of advertisements, partial disclosure, or visual distortion of products. Anyoneincluding the manufacturer of a product, the advertising agency preparing the advertisement, theretailer, or even a celebrity who endorses a product-can be prosecuted for makingunsubstantiated claims about a product or service. As a matter of fact, any advertising that leadsthe consumer to make purchase decisions based on false assumptions about the price and qualityof competitive products is considered deceptive practice and is punishable by law. Responsibilityfor enforcement of the laws dealing with unfair and deceptive advertising comes under thejurisdiction of the federal trade commission.Q. 7. What act created the first comprehensive scheme of regulation over matters concerningconsumer safety? (5 points)Consumer Protection Act, 1957.Q. 8. Dave receives an unsolicited credit card in the mail. Before he can check the mail, thecredit card is stolen from his mailbox. The thief uses Daves credit card and charges exactly$1,252.76 before the credit card company notices the suspicious activity and deactivates thecard. How much of those unauthorized charges is Dave liable for? (5 points)Dave is liable for nothing. He was not even informed that credit card has arrived and was notaware of any such suspicious activity. In this case consumers are protected and bank has to bearthe loss. This is the reason why bank should personally deliver it to client hand.Q. 9. What is the employment-at-will doctrine? What are the exceptions to this doctrine? (5points)Forty-nine states in the U.S. implement the Employment-at-Will Doctrine to varying degrees.Montana is currently the only state that requires all non- public sector employers to have justcause when terminating an employee. According to the doctrine, unless an employee has anemployment contract, the employer can terminate him at any time and without causePurposeThe Employment-at-Will Doctrine is supposed to have the best interest of the employer and theemployee in mind. Meaning, the employee is free to end their employment any time they choose,for any reason or without cause, just as the employer is free to terminate an employee at any timeAdrian GarciaBusiness Law II4/10/14without cause. The majority of employers may request that employees give them notice beforequitting their jobs, but it is not a legal requirement.TerminationUnder the Employment-at-Will Doctrine, an employer can terminate an employee for anyreason. An employer can also fire an employee for unjustifiable reasons. For example, tocut labor costs, an employer can fire all of its higher paid, experienced employees who do nothave contracts , in favor of hiring less experienced employees whose wages are lower. Doing sodoes not violate any type of employment or labor laws.Illegal TerminationEven though the Employment-at-Will Doctrine allows employers to terminate employees attheir discretion, employers cannot terminate an employee for illegal reasons or in violation oftheir civil rights. For example, employers cannot fire anyone based on their ethnic race,disability, gender or religion. Some states have also adopted statutes that prohibit employersfrom firing anyone based on their sexual orientation. However, if an employee suspects this isthe reason for their termination, he will typically have to hire a labor lawyer and successfullysue his employer to recover any damages.Public Policy ViolationsEmployers also cannot fire employees if it violates a public policy or statutes. This oftenreferred to as the public policy exception to the Employment-at-Will Doctrine. For example, ifan employee injures herself at work and files a workman’s compensation claim , the employermay not fire her for that reason alone. Another example of a violation of public policy is if theemployer terminates the employee because she refused to engage in illegal activities on behalf ofher employer. The public policy exception is a state and not federal statute. Not all states haveadopted a public policy exception to the Employment-at-Will Doctrine.Q. 10. Couch Potato Cable Co. is subject to mandatory workers compensation laws in the statesin which it does business. Justin and Phil work for Couch Potato Cable Co. as part of a crew thatinstalls and repairs cable lines. While installing new cable lines at a job site, Justin is injured inan accident that is entirely Phils fault. Justin files a claim for workers compensation. Should theclaim be granted? Why or why not? (5 points)If Justin files the claim within 30 days of the injury it should be granted. Since it was an accidenton Phil’s part the injury is still considered an on the job related injury and thus it can be covered.What happens next after the claim is filled is that the injured worker would tell his medicalprovider that the injury is work related. They must also visit the employers designated physicianfor an examination of how serious the injury is. Afterwards the insurance carrier will contact theemployer to determine the amount of pay the injured worker will receive will out of the job.What type of visa would a foreign worker performing agricultural labor of a seasonal nature haveto obtain to be able to legally work in the United States? (5 points)One of the benefits of learning English is gaining an advantage in the competitive job scene.Those who come to the united states , whether for a short time or on a longer term basis, willoften be quizzed on their knowledge of the language and their ability to use it while performingAdrian GarciaBusiness Law II4/10/14daily tasks. If youve decided to move forward learning English, you may have already thoughtabout the types of careers youd be interested in pursuing in the United States. In order to legallyobtain work, youll need to get the appropriate visa or status. Heres a look at the most commonvisa options available.Employment Authorization Document / work permit :foreign workers may get temporary permission to work in the U.S. by obtaining this permit,which lasts for one year and can be renewed annually. Those who are eligible to apply includestudents seeking specified types of employment, refugees, asylees and asylum seekers, foreignerswho are in the final stage of pursuing permanent residence, and several other specific groups.H1-B Non immigrant / skilled workers:Most people who fall under this category are considered to be highly skilled or educated in aspecialized occupation. Permission to work under this status is for a designated amount of timeand for one specific employer, so you would need to know exactly where youll be workingwhen applying.H2-B Temporary Non-Agricultural Worker:Because the government recognizes an insufficient number of domestic laborers to fill allpositions, some immigrants can obtain this specific permission for employment. Positions mustbe non-agricultural in nature, such as seasonal jobs at a tourist destination.H2-A Seasonal Agricultural Worker:Like the H2-B option, this visa allows foreigners to fill available positions due to lack ofdomestic laborers. In this case, employment is related to agricultural work.GREEN CARD permanent residency:Can be obtained with a green card. If you are offered a job, the organization may be willing tohelp you with this process. It may be necessary for you and the organization to obtain a type ofapproval letter from the U.S. department of labor stating the position can not be filled by a U.S.worker. Green cards are also granted to 50,000 immigrants each year through a lottery program.Exchange Visitor:This temporary status gives immigrants permission to come to the United States to participate ina work- or study-related program, often one in which they are learning English and studying. Ifyoure learning English in an approved exchange program , this is the type of visa you will mostlikely be given by the U.S. government.Adrian GarciaBusiness Law II4/10/14Q. 11. What type of visa would a foreign worker performing agricultural labor of a seasonalnature have to obtain to be able to legally work in the United States? (5 points)One of the benefits of learning English is gaining an advantage in the competitive job scene.Those who come to the united states , whether for a short time or on a longer term basis, willoften be quizzed on their knowledge of the language and their ability to use it while performingdaily tasks. If youve decided to move forward learning English, you may have already thoughtabout the types of careers youd be interested in pursuing in the United States. In order to legallyobtain work, youll need to get the appropriate visa or status. Heres a look at the most commonvisa options available.Employment Authorization Document / work permit :foreign workers may get temporary permission to work in the U.S. by obtaining this permit,which lasts for one year and can be renewed annually. Those who are eligible to apply includestudents seeking specified types of employment, refugees, asylees and asylum seekers, foreignerswho are in the final stage of pursuing permanent residence, and several other specific groups.H1-B Non immigrant / skilled workers:Most people who fall under this category are considered to be highly skilled or educated in aspecialized occupation. Permission to work under this status is for a designated amount of timeand for one specific employer, so you would need to know exactly where youll be workingwhen applying.H2-B Temporary Non-Agricultural Worker:Because the government recognizes an insufficient number of domestic laborers to fill allpositions, some immigrants can obtain this specific permission for employment. Positions mustbe non-agricultural in nature, such as seasonal jobs at a tourist destination.H2-A Seasonal Agricultural Worker:Like the H2-B option, this visa allows foreigners to fill available positions due to lack ofdomestic laborers. In this case, employment is related to agricultural work.GREEN CARD permanent residency:can be obtained with a green card. If you are offered a job, the organization may be willing tohelp you with this process. It may be necessary for you and the organization to obtain a type ofAdrian GarciaBusiness Law II4/10/14approval letter from the U.S. department of labor stating the position can not be filled by a U.S.worker. Green cards are also granted to 50,000 immigrants each year through a lottery program.Exchange Visitor:This temporary status gives immigrants permission to come to the United States to participate ina work- or study-related program, often one in which they are learning English and studying. Ifyoure learning English in an approved exchange program , this is the type of visa you will mostlikely be given by the U.S. government.Q. 12. American Automobile Assemblers Union (AAAU) is a large union whose membersconsist of various assembly line workers who put automobiles together. The AAAU is theofficial labor union of the assembly line workers who work at Fords factory in Detroit. After alarge recall in Ford trucks, Ford decides that they will not give their workers a yearly raise andthey will raise their monthly premiums for healthcare. The enraged employees strike for betterwages and healthcare. During the strike, Ford hires workers to come in and replace the strikingworkers. Ford hires exactly as many workers as those who were striking so they can keepproduction constant. After two months of striking, Ford and AAAU come to an agreement aboutwages and healthcare premiums which ends the strike. AAAU tells Ford that they must fire thescabs who were hired during the strike so their union members can have their jobs back. Fordsays that they arent going to fire anyone and they dont have to. Who is right and why? (6points)In this case Ford is right. Company hired someone so as not to stop production. After two monthsof striking, Ford and AAAU come to an agreement about wages and healthcare premiums whichends the strike. Now since the strike is over Ford does not want hired people to be sacked andthey are right doing that.. 1. What is insider trading and why is it forbidden? (5 points).Insider trading refers to the buying and selling of a company’s stock with knowledge that couldonly be known by someone who works “inside” the company. Usually this is done by anemployee. However, employees are required to report significant trades they make with theshares of their own company, so there is a watchdog. For example, Martha Stewart’s friendrealized that the price of his company’s stock was going to drop, so he warned Martha to sell hershares. That landed Martha Stewart in federal prison. When an employee buys or sells stock forthe company he works for, an inside trade has occurred. Its a common strategy that happensfrequently, according to the Securities and Exchange Commission (SEC). The strategy wascreated on fairness. If someone has the ability to get information for a company that isntavailable to everyone else trading on the market gives the insider an advantage. The concept iscreated on fairness; having information that isn’t available to everyone else trading on the marketgives the insider, well, an inside advantage. Section 10b5 of the Securities Exchange Act of 1934defines precisely what constitutes illegal insider trading.Q. 2. What certification requirements does the Sarbanes-Oxley Act impose on corporateexecutives? (5 points)The route of the Sarbanes-Oxley Act and actions by the U. S. Securities and Exchange Commissionimposed new requirements on auditors, corporate boards and management. The Board must adopt anaudit standard to implement the internal control review required by section 404(b). This standard mustrequire the auditor evaluate whether the internal control structure and procedures include records thatprecisely and fairly reflect the transactions of the issuer, provide sensible assurance that the transactionsare recorded in a manner that will permit the preparation of financial statements in accordance withgenerally accepted accounting principles (GAAP), and a description of any material weaknessesin the internal controls.The Act’s provisions ensures that corporate executives are kept on their toes as they have to makeperiodic certifications that: The signing officers have reviewed the report The report does not contain any material untrue statements or material omission or be consideredmisleading The financial statements and related information fairly present the financial condition and the results inall material respects The signing officers are responsible for internal controls and have evaluated these internal controlswithin the previous ninety days and have reported on their findings A list of all deficiencies in the internal controls and information on any fraud that involves employees whoare involved with internal activities Any significant changes in internal controls or related factors that could have a negative impact on theinternal controlsQ. 3. What are the four major provisions of the Clayton Act and what types of activities do theseprovisions prohibit? List all four and describe the activities each prohibits (8 pts total) An Act tosupplement existing laws against unlawful restraints and monopolies, and for other purposes. Beit enacted by the Senate and House of Representatives of the United States of America inCongress assembled, That antitrust laws, as used herein, includes the Act entitled An Act toAdrian GarciaBusiness Law II4/10/14protect trade and commerce against unlawful restraints and monopolies, approved July second,eighteen hundred and ninety; sections seventy-three to seventy-seven, inclusive, of an Actentitled An Act to reduce taxation, to provide revenue for the Government, and for otherpurposes, of August twenty-seventh, eighteen hundred and ninety-four; an Act entitled An Actto amend sections seventy-three and seventy-six of the Act of August twenty-seventh, eighteenhundred and ninety-four, entitled An Act to reduce taxation, to provide revenue for theGovernment, and for other purposes, approved February twelfth, nineteen hundred andthirteen; and also this Act.Commerce, as used herein, means trade or commerce among the several States and withforeign nations, or between the District of Columbia or any Territory of the United States andany State, Territory, or foreign nation, or between any insular possessions or other places underthe jurisdiction of the United States, or between any such possession or place and any State orTerritory of the United States or the District of Columbia or any foreign nation, or within theDistrict of Columbia or any Territory or any insular possession or other place under thejurisdiction of the United States: Provided, That nothing in this Act contained shall apply to thePhilippine Islands.The word person or persons wherever used in this Act shall be deemed to includecorporations and associations existing under or authorized by the laws of either the UnitedStates, the laws of any of the Territories, the laws of any State, or the laws of any foreigncountry.Section 2. That it shall be unlawful for any person engaged in commerce, in the course of suchcommerce, either directly or indirectly to discriminate in price between different purchasers ofcommodities, which commodities are sold for use, consumption, or resale within the UnitedStates or any Territory thereof or the District of Columbia or any insular possession or otherplace under the jurisdiction of the United States, where the effect of such discrimination may beto substantially lessen competition or tend to create a monopoly in any line of commerce:Provided, That nothing herein contained shall prevent discrimination in price between purchasersof commodities on account of differences in the grade, quality, or quantity of the commoditysold, or that makes only due allowance for difference in the cost of selling or transportation, ordiscrimination in price in the same or different communities made in good faith to meetcompetition: And provided further, That nothing herein contained shall prevent persons engagedin selling goods, wares, or merchandise in commerce from selecting their own customers in bonafide transactions and not in restraint of trade.Section 3. That it shall be unlawful for any person engaged in commerce, in the course of suchcommerce, to lease or make a sale or contract for sale of goods, wares, merchandise, machinery,supplies or other commodities, whether patented or unpatented, for use, consumption or resalewithin the United States or any Territory thereof or the District of Columbia or any insularpossession or other place under the jurisdiction of the United States, or fix a price chargedtherefor, or discount from, or rebate upon, such price, on the condition, agreement orunderstanding that the lessee or purchaser thereof shall not use or deal in the goods, wares,merchandise, machinery, supplies or other commodities of a competitor or competitors of thelessor or seller, where the effect of such lease, sale, or contract for sale or such condition,agreement or understanding may be to substantially lessen competition or tend to create amonopoly in any line of commerce.Adrian GarciaBusiness Law II4/10/14Section 4. That any person who shall be injured in his business or property by reason of anythingforbidden in the antitrust laws may sue therefor in any district court of the United States in thedistrict in which the defendant resides or is found or has an agent, without respect to the amountin controversy, and shall recover threefold the damages by him sustained, and the cost of suit,including a reasonable attorneys fee.Q. 4. What agencies of the federal government enforce the federal antitrust laws? (2 points)3 paragraphsIn the U.S. you have a variety of agencies (both federal and state) which play a role in theenforcement of antitrust laws.Both the FTC and the U.S. Department of Justice (DOJ) Antitrust Division enforce the federalantitrust laws. In some respects their authorities overlap, but in practice the two agenciescomplement each other. Over the years, the agencies have developed expertise in particularindustries or markets. For example, the FTC devotes most of its resources to certain segments ofthe economy, including those where consumer spending is high: health care, pharmaceuticals,professional services, food, energy, and certain high-tech industries like computer technologyand Internet services. Before opening an investigation, the agencies consult with one another toavoid duplicating efforts. In this guide, “the agency” means either the FTC or DOJ, whichever isconducting the antitrust investigation.Q. 5. Super Sweet Soda is engaged in the soft-drink bottling and distribution industry in thestates of New York and New Jersey. The firm currently has about 40 percent of the market forthese products and related services. Carbonate Distribution Corporation competes with SuperSweet Soda in the same states. Carbonate has about 35 percent of the market. If Super SweetSoda were to acquire the stock and assets of Carbonate through a horizontal merger, would SuperSweet Soda be in violation of any of the antitrust laws? If so, which one? Discuss fully. (10points)Yes they would definitely be in violation of the antitrust laws. They would be violation of theFederal law known as the Clayton Act, which specifically prohibits these kind of mergers fromhappening. This is because such a market environment would create a market as they wouldaquire more than 50% of the market in their sector. Under the Clayton Act courts have the powerto stop these sort of business affairs or mergers from ever occurring and perhaps even fine them asubstantial amount for these illegal practices. These fines can go as high as $100 million forcorporations in our case.Since these companies also deal within New York then they would also be in violation of theDonnelly Act, sections 340-347, which specifically prohibits these kind of monopolies of themarket. The penalties for corporations in our case can go as high as $1,000,000.Adrian GarciaBusiness Law II4/10/14Q. 6. When will advertising be deemed deceptive? (5 points)Advertising that makes false claims or misleading statements, as well as advertising that createsa false impression. If retailers systematically advertise merchandise at low prices to getcustomers into their stores and then fail to have the merchandise, they are guilty of deceptiveadvertising. Deceptive practices can take many other forms as well, such as false promises,unsubstantiated claims, incomplete descriptions, false testimonials or comparisons, small-printqualifications of advertisements, partial disclosure, or visual distortion of products. Anyoneincluding the manufacturer of a product, the advertising agency preparing the advertisement, theretailer, or even a celebrity who endorses a product-can be prosecuted for makingunsubstantiated claims about a product or service. As a matter of fact, any advertising that leadsthe consumer to make purchase decisions based on false assumptions about the price and qualityof competitive products is considered deceptive practice and is punishable by law. Responsibilityfor enforcement of the laws dealing with unfair and deceptive advertising comes under thejurisdiction of the federal trade commission.Q. 7. What act created the first comprehensive scheme of regulation over matters concerningconsumer safety? (5 points)Consumer Protection Act, 1957.Q. 8. Dave receives an unsolicited credit card in the mail. Before he can check the mail, thecredit card is stolen from his mailbox. The thief uses Daves credit card and charges exactly$1,252.76 before the credit card company notices the suspicious activity and deactivates thecard. How much of those unauthorized charges is Dave liable for? (5 points)Dave is liable for nothing. He was not even informed that credit card has arrived and was notaware of any such suspicious activity. In this case consumers are protected and bank has to bearthe loss. This is the reason why bank should personally deliver it to client hand.Q. 9. What is the employment-at-will doctrine? What are the exceptions to this doctrine? (5points)Forty-nine states in the U.S. implement the Employment-at-Will Doctrine to varying degrees.Montana is currently the only state that requires all non- public sector employers to have justcause when terminating an employee. According to the doctrine, unless an employee has anemployment contract, the employer can terminate him at any time and without causePurposeThe Employment-at-Will Doctrine is supposed to have the best interest of the employer and theemployee in mind. Meaning, the employee is free to end their employment any time they choose,for any reason or without cause, just as the employer is free to terminate an employee at any timeAdrian GarciaBusiness Law II4/10/14without cause. The majority of employers may request that employees give them notice beforequitting their jobs, but it is not a legal requirement.TerminationUnder the Employment-at-Will Doctrine, an employer can terminate an employee for anyreason. An employer can also fire an employee for unjustifiable reasons. For example, tocut labor costs, an employer can fire all of its higher paid, experienced employees who do nothave contracts , in favor of hiring less experienced employees whose wages are lower. Doing sodoes not violate any type of employment or labor laws.Illegal TerminationEven though the Employment-at-Will Doctrine allows employers to terminate employees attheir discretion, employers cannot terminate an employee for illegal reasons or in violation oftheir civil rights. For example, employers cannot fire anyone based on their ethnic race,disability, gender or religion. Some states have also adopted statutes that prohibit employersfrom firing anyone based on their sexual orientation. However, if an employee suspects this isthe reason for their termination, he will typically have to hire a labor lawyer and successfullysue his employer to recover any damages.Public Policy ViolationsEmployers also cannot fire employees if it violates a public policy or statutes. This oftenreferred to as the public policy exception to the Employment-at-Will Doctrine. For example, ifan employee injures herself at work and files a workman’s compensation claim , the employermay not fire her for that reason alone. Another example of a violation of public policy is if theemployer terminates the employee because she refused to engage in illegal activities on behalf ofher employer. The public policy exception is a state and not federal statute. Not all states haveadopted a public policy exception to the Employment-at-Will Doctrine.Q. 10. Couch Potato Cable Co. is subject to mandatory workers compensation laws in the statesin which it does business. Justin and Phil work for Couch Potato Cable Co. as part of a crew thatinstalls and repairs cable lines. While installing new cable lines at a job site, Justin is injured inan accident that is entirely Phils fault. Justin files a claim for workers compensation. Should theclaim be granted? Why or why not? (5 points)If Justin files the claim within 30 days of the injury it should be granted. Since it was an accidenton Phil’s part the injury is still considered an on the job related injury and thus it can be covered.What happens next after the claim is filled is that the injured worker would tell his medicalprovider that the injury is work related. They must also visit the employers designated physicianfor an examination of how serious the injury is. Afterwards the insurance carrier will contact theemployer to determine the amount of pay the injured worker will receive will out of the job.What type of visa would a foreign worker performing agricultural labor of a seasonal nature haveto obtain to be able to legally work in the United States? (5 points)One of the benefits of learning English is gaining an advantage in the competitive job scene.Those who come to the united states , whether for a short time or on a longer term basis, willoften be quizzed on their knowledge of the language and their ability to use it while performingAdrian GarciaBusiness Law II4/10/14daily tasks. If youve decided to move forward learning English, you may have already thoughtabout the types of careers youd be interested in pursuing in the United States. In order to legallyobtain work, youll need to get the appropriate visa or status. Heres a look at the most commonvisa options available.Employment Authorization Document / work permit :foreign workers may get temporary permission to work in the U.S. by obtaining this permit,which lasts for one year and can be renewed annually. Those who are eligible to apply includestudents seeking specified types of employment, refugees, asylees and asylum seekers, foreignerswho are in the final stage of pursuing permanent residence, and several other specific groups.H1-B Non immigrant / skilled workers:Most people who fall under this category are considered to be highly skilled or educated in aspecialized occupation. Permission to work under this status is for a designated amount of timeand for one specific employer, so you would need to know exactly where youll be workingwhen applying.H2-B Temporary Non-Agricultural Worker:Because the government recognizes an insufficient number of domestic laborers to fill allpositions, some immigrants can obtain this specific permission for employment. Positions mustbe non-agricultural in nature, such as seasonal jobs at a tourist destination.H2-A Seasonal Agricultural Worker:Like the H2-B option, this visa allows foreigners to fill available positions due to lack ofdomestic laborers. In this case, employment is related to agricultural work.GREEN CARD permanent residency:Can be obtained with a green card. If you are offered a job, the organization may be willing tohelp you with this process. It may be necessary for you and the organization to obtain a type ofapproval letter from the U.S. department of labor stating the position can not be filled by a U.S.worker. Green cards are also granted to 50,000 immigrants each year through a lottery program.Exchange Visitor:This temporary status gives immigrants permission to come to the United States to participate ina work- or study-related program, often one in which they are learning English and studying. Ifyoure learning English in an approved exchange program , this is the type of visa you will mostlikely be given by the U.S. government.Adrian GarciaBusiness Law II4/10/14Q. 11. What type of visa would a foreign worker performing agricultural labor of a seasonalnature have to obtain to be able to legally work in the United States? (5 points)One of the benefits of learning English is gaining an advantage in the competitive job scene.Those who come to the united states , whether for a short time or on a longer term basis, willoften be quizzed on their knowledge of the language and their ability to use it while performingdaily tasks. If youve decided to move forward learning English, you may have already thoughtabout the types of careers youd be interested in pursuing in the United States. In order to legallyobtain work, youll need to get the appropriate visa or status. Heres a look at the most commonvisa options available.Employment Authorization Document / work permit :foreign workers may get temporary permission to work in the U.S. by obtaining this permit,which lasts for one year and can be renewed annually. Those who are eligible to apply includestudents seeking specified types of employment, refugees, asylees and asylum seekers, foreignerswho are in the final stage of pursuing permanent residence, and several other specific groups.H1-B Non immigrant / skilled workers:Most people who fall under this category are considered to be highly skilled or educated in aspecialized occupation. Permission to work under this status is for a designated amount of timeand for one specific employer, so you would need to know exactly where youll be workingwhen applying.H2-B Temporary Non-Agricultural Worker:Because the government recognizes an insufficient number of domestic laborers to fill allpositions, some immigrants can obtain this specific permission for employment. Positions mustbe non-agricultural in nature, such as seasonal jobs at a tourist destination.H2-A Seasonal Agricultural Worker:Like the H2-B option, this visa allows foreigners to fill available positions due to lack ofdomestic laborers. In this case, employment is related to agricultural work.GREEN CARD permanent residency:can be obtained with a green card. If you are offered a job, the organization may be willing tohelp you with this process. It may be necessary for you and the organization to obtain a type ofAdrian GarciaBusiness Law II4/10/14approval letter from the U.S. department of labor stating the position can not be filled by a U.S.worker. Green cards are also granted to 50,000 immigrants each year through a lottery program.Exchange Visitor:This temporary status gives immigrants permission to come to the United States to participate ina work- or study-related program, often one in which they are learning English and studying. Ifyoure learning English in an approved exchange program , this is the type of visa you will mostlikely be given by the U.S. government.Q. 12. American Automobile Assemblers Union (AAAU) is a large union whose membersconsist of various assembly line workers who put automobiles together. The AAAU is theofficial labor union of the assembly line workers who work at Fords factory in Detroit. After alarge recall in Ford trucks, Ford decides that they will not give their workers a yearly raise andthey will raise their monthly premiums for healthcare. The enraged employees strike for betterwages and healthcare. During the strike, Ford hires workers to come in and replace the strikingworkers. Ford hires exactly as many workers as those who were striking so they can keepproduction constant. After two months of striking, Ford and AAAU come to an agreement aboutwages and healthcare premiums which ends the strike. AAAU tells Ford that they must fire thescabs who were hired during the strike so their union members can have their jobs back. Fordsays that they arent going to fire anyone and they dont have to. Who is right and why? (6points)In this case Ford is right. Company hired someone so as not to stop production. After two monthsof striking, Ford and AAAU come to an agreement about wages and healthcare premiums whichends the strike. Now since the strike is over Ford does not want hired people to be sacked andthey are right doing that.
 

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