Term
| What was the main objective of The Securites Act of 1933? |
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Definition
| Regulates the intial offerings of securites by public corporations by prohibiting sales of securites prior to registering w/ the SEC. |
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Term
| What was the Securities Exchange Act of 1934? |
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Definition
| Regulates trading of securites once they're issued. |
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Term
| What is primary role of the SEC? When and what act was the SEC created under? |
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Definition
- Created under the 1934 Act
- To ensure fair and full diclosure of all facts w/ regard to public securities.
- Primary concern is that inverstors are provided w/ all adequate info.
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Term
| What are the 5 divisions of the SEC? |
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Definition
- Corporate Finance
- Corporate Regulation
- Market Regulation
- Investment Management
- Enforcement |
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Term
What is the Primary function of Corparate Finance division? |
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Definition
- Enforce adherence to financial reporting laws.
- Enforce discloslure requirements
- Review quarterly and annual reports. |
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Term
| What is the primary function of the Market Regulation division? |
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Definition
- Monitor the market to look for manipulation and irregularities. |
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Term
What is the primary function of the Enforcement Division? |
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Definition
- To provide oversight and enforce all policies of the SEC. |
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Term
| What is the primary function of the Corporate Regulation division? |
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Definition
- To act as an advisor to Federal bankruptcy court. |
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Term
| What is the primary function of the Investment Management Division? |
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Definition
- To Administer the Investment Advisors Act of 1940. |
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Term
| What is the primary purpose of the Sarbanes-Oxley Act of 2002? |
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Definition
- Requires all CEOs and CFOs to certify financial reports.
- If securities fraud is proven, officers must forfit all profits and bonuses. |
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Term
| What 3 elements must exist to be considered a Security? |
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Definition
- Common Enterprise
- Reasonable Expectations of Profit
- Profits derived soley from the efforts of others |
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Term
| What are the stages of the registration process with the SEC? |
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Definition
1. Pre-filing. No offers to buy or sell shares or securites during this stage.
2. Waiting Period. Oral offers are allowed but, not a final sale. "Red Herring" > contains all info except the price.
3. Post - Effective Period. Usually 20 days. Sale of shares may take place after the 20 days or upon commion approval, whichever is first. |
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Term
What is shelf registration? |
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Definition
The regeistering of securities that a corporation may wish to sell over a period of time.
EX. A corporation may feel good about its value increasing so it may want to hold on to a % of its shares to sell when the corporation is at a higher value.
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Term
| What constitutes a security sale to be "exempt" from being reported? |
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Definition
1. Private Placement - Top level investors that are savy enough to evaluate the info provided to them.
2. Intrastate - Selling the security to a resident of the state in which business is being conducted. The issuer must be a resident of the state and do business soley w/ in that state.
3. Small Business - Any offer not exceeding $5 million. |
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Term
| What is a broker and a dealer? |
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Definition
Broker - A person engaged in the business of conducting transactions for the account of others.
Dealer - A person engaged in buying and selling securities for their own account. |
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Term
| Securities Exchange Act of 1934 Section 15(b) |
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Definition
| SEC may revoke or suspend a broker-dealer's registration or censure them. |
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Term
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Definition
Documents in which shareholders (of a public company) authorize an individual or institution to vote their shares at a shareholder's meeting.
Proxy voting is a major tool in for electing the directors and setting policy. |
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Term
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Definition
An acquiring company or individual seeks to purchase a controlling interest (51%) of another company which would lead to a takeover of that company's board of directors and management. |
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Term
| What are sections 13 and 14 of the Securities Exchange Act of 1934? |
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Definition
Section 13 - Any person or group acquiring more than 5% of any class of registered securities (company) to register a statement with in 10 days with both the SEC and target company.
Section 14 - States that no one may make a tender offer that results in ownership of more than 5% of a company unless that person or group files w/ the SEC and the target company. |
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Term
| What is Section 14(e) (Williams Act) of the Securities Exchange Act of 1934? |
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Definition
Section 14(e) - Makes it a criminal offense to make an untrue or misleading statement or to engage in fradulent acts or deceptive practices in connection with a tender offer. |
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Term
| What does Section 10(b) and Rule 10(b)-5 of the 1934 Act pertain to? |
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Definition
Securities Fraud
- Insider trading
- Mistatement of Corporation - Any report, release, or financial statement released by an officer, director, or employee of a corporation in connection with a security sale showing intent to mislead shareholders or potential investors.
- Corporate mismanagement - Any transaction involving the purchase or sale of a security in which there is fraud based on an action of management. |
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