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22 Cards in this Set

  • Front
  • Back
2 major securities Act
-Securities Act 1933 (regulates original issuance of securities )

-Securities Exchange Act 1934 (regulates sale and purchase of securities after issuance )
Securities
Stocks
Bonds
Debentures
Investment Contract
Oil Well interest
Collateral Trust Certificates
Stock options
Warrants
LIMITED partnership interest
What are not considered as securities ?
Certificate of Deposits
General Partnership interest
Purpose of Securities Act 1933
-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
Who are required to register with SEC
Issuers
Underwriters
Dealers
Registration Statement
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
Prospectus
is a written offer to sell shares
-Part I of registration Statement
-each investor must be given one before or contemporaneous with every sale
Contents of Part II of registration statement
-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%
Sales activity of securities
-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)
WKSI- well known seasoned issuers- (wic-sees)
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
2 types
- Securities exceptions (BRINGS)
-Transaction Exception
Securities Exceptions under 1933 Act
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)
Transaction Exceptions under 1933 Act ( a-c)
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
Transaction Exception of 1933 Act -(d)- Regulation A
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.
Transaction Exception of 1933 Act -(g)- Regulation D -504
-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
Transaction Exception of 1933 Act -(h)- Regulation D -505
-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
Transaction Exception of 1933 Act -(h)- Regulation D -506
-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
Section 11 liability
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
Securities Exchange ACT 1934 registration requirements
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
Securities Exchange ACT 1934 reporting requirements
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.
Tombstone Ad
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
Section 18 of 1934 Act
a person can be held liable for
-intentionally making false or misleading statement in the reg.OR reports