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22 Cards in this Set
- Front
- Back
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2 major securities Act
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-Securities Act 1933 (regulates original issuance of securities )
-Securities Exchange Act 1934 (regulates sale and purchase of securities after issuance ) |
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Securities
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Stocks
Bonds Debentures Investment Contract Oil Well interest Collateral Trust Certificates Stock options Warrants LIMITED partnership interest |
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What are not considered as securities ?
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Certificate of Deposits
General Partnership interest |
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Purpose of Securities Act 1933
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-investors have sufficient information to make investment decision
It does this by requiring -issuers to register new issues with SEC -provide prospectus to prospective investors |
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Who are required to register with SEC
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Issuers
Underwriters Dealers |
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Registration Statement
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MOST securities are required to be registered with SEC
The Registration Statement consists of 2 parts -Part I prospectus -Part II detailed information about the shares -Becomes effective on the 20th day after its filing |
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Prospectus
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is a written offer to sell shares
-Part I of registration Statement -each investor must be given one before or contemporaneous with every sale |
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Contents of Part II of registration statement
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-audited BS dated not more than 90 days before
-P/L for preceding 5 years - FS must be certified by a public accounting firm - must have names of directors, officers, underwriters & shareholders own more than 10% |
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Sales activity of securities
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-Pre filing period- 30 days before reg.- NO SALES allowed unless issuance is exempt from reg.
-Waiting period- 20 days from reg to filing- NO SALES allowed- EXCEPT -Oral offers -Tombstone ads -Preliminary Prospectus (red herring) |
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WKSI- well known seasoned issuers- (wic-sees)
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are issuers those
- who have been continuously been reporting under 1934 Act for the past 12 months -have not defaulted in dividend, PS interest payment, material debt, long term rent obligation in CURRENT FISCAL year -have 700 mil equity outstanding & 1 bn in non convertible securities in last 3 years - - - |
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Exceptions for 1933 ACT
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2 types
- Securities exceptions (BRINGS) -Transaction Exception |
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Securities Exceptions under 1933 Act
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BRINGS- securities issued by
-Banks, savings, loans (CD) -Regulated common carriers (railroad) -Insurance policies (not securities) -Non-profit organizations -Government -Short term commercial paper (notes, bonds-< 9mnths maturity) |
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Transaction Exceptions under 1933 Act ( a-c)
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a-Casual sales ( not by issuers, under writers or dealers)
b-Corporate reorganizations provided no commission is paid ( exchanges with existing holders) c-intrastate sales-entire issue offered and sold to residents of issuers state, cannot be resold before 9 mnths |
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Transaction Exception of 1933 Act -(d)- Regulation A
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is a partial exemption where simplified form of registration is permitted
-unaudited FS allowed -files offering statement instead of registration statement -should not exceed 5 mil in 12 month period. |
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Transaction Exception of 1933 Act -(g)- Regulation D -504
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-private offering exception, so no ads
-public resale prohibited for 2 years unless resale falls under Reg. D exemption -SEC must be informed within 15 days - issue must not exceed 1mil in 12 months |
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Transaction Exception of 1933 Act -(h)- Regulation D -505
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-private offering exception, so no ads
-public resale prohibited for 2 years unless resale falls under Reg. D exemption -SEC must be informed within 15 days - issue must not exceed 5mil in 12 months -may be sold to ANY number of accredited investor and 35 or LESS unaccredited investors -if ONLY accredited investors, no disclosure is required |
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Transaction Exception of 1933 Act -(h)- Regulation D -506
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-private offering exception, so no ads
-public resale prohibited for 2 years unless resale falls under Reg. D exemption -SEC must be informed within 15 days - issue is UNLIMITED -may be sold to ANY number of accredited investor and 35 or LESS unaccredited investors -if ONLY accredited investors, no disclosure is required |
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Section 11 liability
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ANYONE who signs a registration statement is liable for damages. Other than issuer, others can claim due diligence defense
LAM -Loss -Acquired stock -the statement contained Material misstatement |
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Securities Exchange ACT 1934 registration requirements
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Only 2 types of companies must register
-whose shares are traded in the National Exchange -have at least 500 shareholders in any outstanding class and 10 mil in assets -National stock exchanges, brokers and dealers must also register |
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Securities Exchange ACT 1934 reporting requirements
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5% TIP
- anyone having 5% or more beneficial ownership must file with SEC, issuer and dealer -Tender offer to buy 5% or more of shares must file -Insiders must file a report of their holdings in the reporting company and make MONTHLY UPDATES -Proxy solicitations must be reported -10K- filed annually-within 60 days of the end of FY-contains material facts about the management -10Q- filed quarterly within 40 days- reviews of interim financial info by CPA -8K-filed within 4 days after a major change in the company. |
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Tombstone Ad
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can be placed before registration statement is effective
-Only certain information may be included ie nature of security, price, availability of prospectus -may not make an offer to sell -cannot replace prospectus |
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Section 18 of 1934 Act
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a person can be held liable for
-intentionally making false or misleading statement in the reg.OR reports |
