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22 Cards in this Set
- Front
- Back
- 3rd side (hint)
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Investor protection
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Prevent fraud in the sale of securities by requiring full disclosure of all material info about company.
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Security
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1. Investment of money
2. Common enterprise 3. Investor expects profits 4. Profit made from efforts of a promoter or third party other than investor. |
Stocks and bonds
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Securities Act of 1932
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Requires full and truthful disclosure by companies issuing securities. Securities have to be registered by sec before sold to public. Regulates primary offerings.
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Requirements of registration
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A. Must contain certain info calculated to provide the potential investors with necessary info upon which to base decision.
B. Signed by officers and directors signees liable for false statements or omission of fact. C. Prospectus provided- it is a solicitation of sale, disclosure statement D. 20 day waiting period before can sell E. Tombstone Ad tells investor where and how to obtain red herring prospectus. G. Escape liability for fraud by showing due diligence |
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Exempt securities
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Issued by banks, government, savings and loans, charity, common owners and officers and directors.
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Exempt transactions
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1. Small offering Reg A
2. Private offering Reg D 504, 505, 506 3. Intrastate exemption 80% 4. Shelf registration |
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Small offering
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$5 million 12 month period
Short form registration with sec Advertising allowed Sell stocks online |
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Private offering
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Sell stocks to people you know. No advertisement to public.
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Rule 504
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$1 million in 12 months
For non investment companies Private offering |
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Rule 505
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$5 million in 12 months
No advertising No more than 35 non-accredited investors Unlimited amounts can be sold to credited investors (banks, insurance, invest corp) |
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Rule 506
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Unlimited amount of $
No advertising Unlimited number of accredited investors Must know financial matters |
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Intrastate investment
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Investors must be in the se state
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Shelf registration
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Files registration statement to state how many shares issued and how many held.
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Securities exchange act of 1943
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1. Regulates secondary market w disclosure and anti fraud
2. Regulates security exchanges, broker deals, with market surveillance. 3. Annul and quarterly reports filed by public companies 4. Reviews procedures used to obtain proxies 5. Insider trading fraud |
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Section 16
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Insider reporting
6 months Insiders: directors, officers and 10% shareholders Securities exchange act |
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Section 10b Rule 10b-5
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Prohibits commission of fraud in sale of securities
Failure to disclose non public material, violators must act with scienter or intent not negligence |
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Securities investors protection act of 1970
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Creates a fund to protect investors from financial harm caused when stock brokerage houses fall.
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Foreign corrupt practices act
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Corporations doing business in other countries, requires public companies to keep and maintain unilateral system of accounting.
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Insider trading sanctions act
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Sec can recover up to 3x damages profits made in transmission gives rewards.
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Market reform act 1990
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Ensures stability and integrity of natural securities by granting broader powers in an emergency to support trading.
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Penalties
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Civil and criminal sue under anti fraud provisions.
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State securities laws
Blue sky laws |
Regulate securities only within the state mandate disclosures before registration "within borders"
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