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14 Cards in this Set

  • Front
  • Back
phrase that covers a variety of schemes that refer to the buying and selling of stock

1) Investment of money
2) Common enterprise
Criteria 1 of Security
1) Is the investment in a common business activity?
Criteria 2 of Security
2) Is the investment based on reasonable expectation of profits?
Criteria 3 of Security
3) Will profits be earned through the efforts of someone other than the investor?
1933 Securities Act
Established liability of companies to sell valid stocks; no misleading, false, or omitted info.
Disclosure of 1933 Securities Act
1. Registration Statement- filed with the SEC before sell

2. Prospectus - provided to potential investor before sell

*Applied only to IOP
SEC v. Howey & Hills Company
Oranges, Land in FL

1) Deed
2) Management Service Agreement
3) End of year payments if profit

1934 Securities Act
Applies to regulation and trading of stocks

1. Registration w/ SEC
2. Yearly audited financial statements, regular reporting of trading - continued info. to investors; no misleading
Insiders (10b -5)
officers, directors, 10% equity owners

Hold stock for 6 months, report holdings, trading, and no short term profit
Basic v. Levinson
Levinson sold stock based on Fraud on the Market Info.

Basic LIABLE, Materiality
Fraud on the Market
Investor does not have to rely on publicly divudged info; should be able to assume the market price is fair and price immediately reflects all pertinent info.
Materiality (indincia or interest)
Disclosure of omitted fact would have been viewed by reasonable investor as significant in total mix of info. available to make decisions of holding or selling
Material Criteria 1
1. Significant to reasonable investor if withheld or misrepresented
Material Criteria 2
2. Company chose to withhold info. but stated "no comment"