Reading...
Play button
Play button
Use LEFT and RIGHT arrow keys to navigate between flashcards;
Use UP and DOWN arrow keys to flip the card;
H to show hint;
A reads text to speech;
14 Cards in this Set
- Front
- Back
|
Security
|
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 ILLEGAL SECURITY, LIABLE |
|
|
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"
|
