Scissorwire Inc. sells shares of its stock to the public, with each share valued at $16. After a year, the company incurs a loss and the price of the stock drops to $5 per share. The company reveals that it had deliberately not registered with the SEC before going public and that it has no money to pay the investors. Which of the following is true in this situation?
A. Scissorwire Inc. can register with the SEC at any point after the decline in share price.
B. The U.S. government can file a criminal lawsuit against Scissorwire Inc. to seek criminal penalties.
C. The investors were negligent in failing to verify registration prior to stock purchase, and therefore cannot rescind their purchase.
D. Scissorwire Inc. is liable for violation of the Securities Exchange Act of 1934.
Answer: B
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Which constraint best describes the situation with decision variables A and B?
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