Blaw Ch 28

Front 1

accredited investor

Back 1

In the context of securities offerings, sophisticated investors, such as banks, insurance companies, investment companies, the issuer's executive officers and directors, and persons whose income or net worth exceeds certain limits.

Front 2

blue sky laws

Back 2

State laws that regulate the offer and sale of securities.

Front 3

bounty payment

Back 3

A reward (payment) given to a person or persons who perform a certain servicesuch as informing legal authorities of illegal actions.

Front 4

corporate governance

Back 4

The system by which corporations are directed and controlled and which governs the relationship of the corporation to its shareholders. The corporate governance structure specifies the distribution of rights and responsibilities among different groups within the corporation and spells out the rules and procedures for making corporate decisions.

Front 5

free-writing prospectus

Back 5

A free-writing prospectus is any type of written, electronic, or graphic offer that describes the issuing corporation or its securities and includes a legend indicating that the investor may obtain the prospectus at the SEC's Web site.

Front 6

insider trading

Back 6

The purchase or sale of securities on the basis of inside information (information that has not been made available to the public) in violation of a duty owed to the company whose stock is being traded.

Front 7

investment company

Back 7

A company that acts on behalf of many smaller shareholder-owners by buying a large portfolio of securities and professionally managing that portfolio.

Front 8

investment contract

Back 8

In securities law, a transaction in which a person invests in a common enterprise reasonably expecting profits that are derived primarily from the efforts of others.

Front 9

mutual fund

Back 9

A specific type of investment company that continually buys or sells to investors shares of ownership in a portfolio.

Front 10

prospectus

Back 10

A document required by federal or state securities laws that describes the financial operations of the corporation, thus allowing investors to make informed decisions.

Front 11

red herring prospectus

Back 11

A preliminary prospectus that can be distributed to potential investors after the registration statement (for a securities offering) has been filed with the Securities and Exchange Commission. The name derives from the red legend printed across the prospectus stating that the registration has been filed but has not become effective.

Front 12

SEC Rule 10b-5

Back 12

A rule of the Securities and Exchange Commission that makes it unlawful, in connection with the purchase or sale of any security, to make any untrue statement of a material fact or to omit a material fact if such omission causes the statement to be misleading.

Front 13

stock options

Back 13

A certificate that grants the owner the option to buy a given number of shares of stock, usually within a set time period.

Front 14

tippee

Back 14

A person who receives inside information.

Front 15

tombstone ad

Back 15

An advertisement, historically in a format resembling a tombstone, of a securities offering. The ad informs potential investors of where and how they may obtain a prospectus.