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;
45 Cards in this Set
- Front
- Back
|
SECURITIES ACT OF 1933
|
-to provide potential investors with full and fair disclosure of all material information relating to issuance of securities, including information as the principal purpose for which the offering 's proceeds willl be used
-to prevent fraud & misrepresentation -initial offerings of securities |
|
|
SEC ACT 33
|
-must file prospectus
-registration stmt with SEC |
|
|
RED HERRING PROSPECTUS
|
preliminary registration statement
-has been filed -but has not become effective |
|
|
TOMBSTONE ADVERTISEMENT
|
-to inform investors that a prospectus for the given company is available
-not an offer to buy securities -makes known the availability of a prospectus |
|
|
WHAT IS A SECURITY?
(under Sec 33 Act) |
-the idea that the investor intends to make a profit through the efforts of others rather than through his/her own efforts
-notes, bonds,debentures, stocks, (preferred & common) investment contracts, treasury stock, options, warrants, limited but not general partnership (mgmt) interests, collateral trust certificates NOT CD'S |
|
|
FED SEC 33 ACT
WHICH SECURITIES ARE EXEMPT FROM REGISTRATION? |
ACIDBRAINS
A - Reg A C - Commercial Paper (notes,bonds mature less than 9 months & (not for investing purposes) I - Intrastate offerings *at least 80% of sales are exclusive to state of incorporation but buyers cannot resell outside the state for 9 months D - Reg D private placement offerings (504, 505, 506) B rokerage transactions R egulated Industries (savings & loans) A gencies of the gvmt - railroads, muni bonds) I nsurance Contracts & Policies *stock from insurance co's are not exempt* N ot for profit S tock Divs & Splits (exchanges with existing holders) |
|
|
WHAT IS THE LIABILITY FOR FALSE OR MISLEADING REGISTRATION STMTS?
|
whether securities are exempt or not, still liable under the anti-fraud provisions of the Sec 33 Act
-both SEC & person defrauded can challenge the fraud |
|
|
WHICH SECURITIES ARE EXEMPT FROM REGISTRATION?
|
acidbrains
-not for profit -domestic governmental organization -savings and loans -securities exchanged for other securities by the issuer exclusively with its investing shareholders as long as no commission is paid & both sets of securities are issued by same issuer -sales or offers to sell by any person other than an issuer, underwriter, or dealer INSURANCE co securities are NOT EXEMPT |
|
|
BLUE SKY LAWS
|
state laws that regulate the securities at a state level
-must comply with Blue Sky laws as well if you want to sell c/s to the public in an interstate offering under Sec 33 Act |
|
|
WHY DID THE SEC ADOPT MORE REGISTRATION FORMS
FORM S-2 AND FORM S-3? |
-to decrease the work that issuers have in preparing registration statements by letting them give less detailed disclosure in lieu of the S-1 (long form)
|
|
|
REG D - 504
|
-up to 1,000,000M
-sold in a 12-month period -SEC must be notified within 15 days -no advertising to nonaccredited investors -no resale to non acc investors for 2 years -any amount of investors-unlimited -issuer need not restrict the purchasers' right to sell -can advertise unless to only "accredited investors" -no financial info |
|
|
REG D - 505
|
-up to 5,000,000M
-sold in a 12 month period -only 35 unaccredited investors (limited) -any accredited investers (unlimited) -must notify SEC of offering within 15 days of sale |
|
|
REG A
|
-up to 5M, small offering
-not exceeding 12 mos -SEC must be notified within 15 days -offering circular - containing key info -does not require to file prior audited f/s -does not require to provide investors with a proxy stmt -has no acc/unacc investor limits -offering stmt is reqd |
|
|
REG D - 506
|
-amounts over 5,000,000M
-up to 35 unaccredited investors -unlimited accredited investors |
|
|
PRIVATE PLACEMENT EXEMPTION
|
-unlimited # of securities for any dollar amount when sold to ACCREDITED investors
|
|
|
INTRASTATE ISSUE
|
When issuer is a resident of that state, doing 80% of its business in that state and only sells or offers the securities to residents of the same state
-not all instrastate offerings are exempt, must meet reqs |
|
|
SHELF REGISTRATION
|
-issue securities to the public on a continuous basis, such as mutual funds
-requires a company to periodically update their prospectus but allows sales and resales to be continuous |
|
|
WHO HAS TO FILE?
REGISTRATION STATEMENT MUST BE FILED & PROSPECTUS MADE AVAILABLE WHEN |
SPIN
Securities are offered Public Issue-issuing co, officer, director, dealer, underwriter major shareholder > 10% Interstate Commerce No other exemption is available |
|
|
EXEMPTIONS
|
ACID
A - Reg A C ommercial Paper -mature < 9mos Casual Sale - sale or offer to sell made a person other than an issuer, underwriter, officers 10% or more I ntrastate offerings -at least 80% of sales are exclusive to state of incorporation, buyer's cannot resell outside the state for 9 months D - Reg D 504 505 506 PRIVATE PLACEMENT, how many people in private -must notify SEC within 15 days -general no advertising -no resale (have to hold at least 2 yrs) |
|
|
MORE EXEMPTIONS
|
BRAINS
B rokerage transactions R egulated securities -savings & loans A gencies of Govt (railroads, muni bonds) I nsurance contracts/policies - insurance co that issues stock - not exempt Not for Profit / charity S tock Dividends & Splits (exchanges with existing holders who know about company |
|
|
DOES OFFER COMPLY WITH $$ LIMITATION?
|
REG A - UP TO 5 MILLION
REG D - 504- UP TO 1 MILLION 505- UP TO 5 MILLION 506 - UNLIMITED |
|
|
DOES OFFER COMPLY WITH METHOD OF SALE RESTRICTIONS?
|
REG A - freely advertised, no restrictions on resale
504 - no advertising to non-acc investors, no resale to non-acc investors for 2 yrs 505 - no advertising, no resale for 2 yrs, audited b/s must be provided to non-acc 506 - no advertising, no resale for 2 yrs, audited b/s must be provided to non-acc and must be represented by accredited |
|
|
WAS OFFERING SOLD WITHIN THE APPLICABLE TIME LIMIT?
|
REG A, 504, 505 & 506 -
SEC must be notified w/ 15 days of sale |
|
|
WAS SEC NOTIFIED TIMELY OF THE FIRST SALE OF SECURITIES?
|
504 - within 12 months
505 - within 12 months 506 - unlimited |
|
|
TENDER OFFERS
|
attempts to buy 5% or more of a class of stock
-owners of 5% or more must file Sch 13D - showing source of funds used for purchase -amt of stock owned -price offered for shares -future plans for the co -disclose to SEC, the co, & stock exchange |
|
|
PROXY SOLICITATIONS
|
the right to vote someone's shares at a shareholder meeting
-must be sent to each shareholder -must notify SEC 10 days prior to mailing |
|
|
LIABILITY OF COMPANY NOT MEETING REPORTING REQUIREMENTS OR VIOLATING PROVISIONS OF 33 OR 34 ACTS
|
registration of securities be suspended or revoked
|
|
|
LIABILITY OF CPA IF VIOLATE ANY PROVISION OR WILLFULLY OMITS A MATERIAL FACT IN A REGISTRATION STMT
|
criminally liable
|
|
|
SARBANES-OXLEY ACT
|
-amends 34 Act to make it illegal for issuer to give various types of personal loans to or for any executive officer or director
-stmt of CEO/CFO that certifies reports comply fully with relevant securities laws and fairly present the financial condition of the company |
|
|
SARBANES-OXLEY ACT - FINES
|
any officer who makes certification while knowing it does not comply with SEC requirements can be fined up to 1M or imprisoned up to 10 years
-officers can be fined up to 5M in prison up to 20 years |
|
|
SARBANES-OXLEY ACT - REQUIREMENTS OF EXECUTIVES
|
executives to forfeit any bonus or incentive based pay or profits from the sale of stock, received within 12 months prior to an earnings statement when misconduct is present
|
|
|
SARBANES-OXLEY ACT -
REQUIREMENTS OF AUDITORS |
requires auditor to promptly inform the board of directors (audit committee) of all significant problems identified during the engagement
|
|
|
AUDIT REPORTS -
1. UNQUALIFIED OPINION |
standard "clean" report
|
|
|
AUDIT REPORTS
2. UNQUALIFIED OPINION WITH EXPLANATORY LANGUAGE ADDED |
uncertainty, division of responsibility, emphasis of matter
|
|
|
AUDIT REPORTS
3. QUALIFIED OPINION |
"except for"
-disagreement (non-gaap, inadequate disclosure, inconsistency), scope limitation |
|
|
AUDIT REPORTS
4. ADVERSE OPINION |
"do not present fairly"
|
|
|
AUDIT REPORTS
5. DISCLAIMER OF OPINION |
"we do not express an opinion"
|
|
|
AUDIT REPORTS
3. QUALIFIED OPINION |
"except for"
-disagreement (non-gaap, inadequate disclosure, inconsistency), scope limitation |
|
|
AUDIT REPORTS
4. ADVERSE OPINION |
"do not present fairly"
|
|
|
AUDIT REPORTS
5. DISCLAIMER OF OPINION |
"we do not express an opinion"
|
|
|
SECURITIES ACT OF 1933
|
-the purpose of the 1933 Act are to provide investors with full and fair disclosure of a security offering
-to prevent fraud -no sale of a security shall occur in interstate commerce without 1) registration & 2) prospectus to purchasers unless security is exempt for registration |
|
|
10-K
|
annual reports
*must be filed with SEC *financial stmts must be certified by independent public accountants |
|
|
10-Q
|
quarterly reports
*doesn't have to be filed with SEC *doesn't have to be certified by independent public accountants |
|
|
8-K
|
current report
*when certain material events take place (i.e. change in corporate control) *file with SEC within 15 days after material event occurs |
|
|
Robinson-Patman Act
|
prohibits price discrimination in interstate commerce that results in lessening competition or creating a monopoly
|
