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33 Cards in this Set

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  • Back
Accredited Investor
Any institution or individual meeting minimum net worth requirements for the purchase of securities qualifying under the Regulation D registration exemption, as defined in Rule 502 of Regulation D.
The official or agency administering the securities laws of a state also referred to as a commissioner or secretary. A person authorized by a court of law to liquidate the estate of an intestate decendant.
Any material designed for use by newspapers, magazines, radio, television, telephone recording, or any other public medium to solicit business. The firm using advertising has little control over the type of individuals being exposed to the advertising.
Advertising Prospectus
Any investment company prospectus that inclused the fund's performance data, as well as standardized information contained in the summary prospectus.
A person in a position to influence the policies of a corporation. This includes partners, offiers, directors, and entities who control 10% or more of the voting stock.
1. Any individual acting for the accounts of others, also any person licensed by a state as a life insurance agent. 2. A securities salesperson who represents a broker/dealer or an issuer when selling or trying to sell securities to the investing public. This individual is considered an agent whether he actually receives or simply solicits orders. An agent is anyone who receives an order while representing a broker/dealer.
Assessable Stock
Stock issued below par, carrying with it the option on the part of the issuer to assess the owner for the remainder. A gift of assessable stock is considered a sale under the Uniform Securities Act.
A document accompanying or part of a stock certificate that is signed by the person named on the certificate for the purpose of transferring the certificate's tiltle to another person's name. The act of identifying and notifying an account holder that an option held short in that account has been excercised by the option owner.
Associated Person of a member (AP)
Any employee, manager, director, officer, or partner of a member broker/dealer or another entity (issuer bank etc) or any person controlling, controlled by, or in common control with that member is considered an associated person ot that member.
Blue Sky
To qualify a securities offering in a particular state.
Blue-Sky Laws
The commonly used term for state regulations governing the securities industry
Brochure Rules
Any investment advister must provide its customer with its brochure (Part II of Form ADV) at least 48 hours before having him sign the contract. Failing that, the customer must be given 5 days to void the contract. Any procedure governed by this timing process (for example, informing the customer of legal action taken against the adviser) is said to proceed by brochure rules.
Any individual or a firm that charges a fee or commission for executing buy and sell orders submitted by another individual or firm. The role of a broker firm when it acts as an agent for a customer and charges the customer a commission for its services.
A firm (which could be an individual) that acts for the securities accounts of others (acting as a broker) or its own account (acting as a dealer) in trades. Excluded from the definition are agents, issuers, banks, savings institutions, trust companies, and deminimus exemptions.
Nonpunitive termination of registration by the Administrator. Reasons include the registrant's death, its ceasing to do business, mental incompetence on the part of the registrant, or the Administrator's inability to locate the registrant.
Cease & Desist
A temporary, or summary, order the Administrator takes to prevent a securities violation. No prior notice or opportunity for a hearing is required for a summary action, but its provisions may not be enforced without a court order. The affected party may demand a hearing in writing within 15 days, and the hearing must take place within 15 days of the Administrator's receipt of the written demand
A prohibited practice in which a salesperson effects tansactions in a customer's account which are excessive in size and/or frequency in relation to the size and character of the account.
Mixing broker/dealer or investment adviser cash and securities with customer cash and securities in the same account. This is a prohibited practice.
A broker's fee for handling transactions for a client in an agency's capacity.
Consent to service of process
A legal agreement entered into by all registrants, whereby the Administrator is given the power to accept legal papers on behalf of the registrant.
A commercial bank or trust company that holds monies and securities owned by an investment company in safekeeping.
Maintaining posession of a customer's money and/or securities. Many states prohibit invesmtent advisors from keeping custody. The others require the adviser to notify the Administraor if it intends to do so. An adviser is also considered to have custody if the customer has authorized it to receive and disperse funds and securities from his bank account.
A firm acting as a principal, for its own account, in a trade. Such a firm actually owns the securities during the trade and charges its customers a markup, if the firm is selling the securities, or a mardown if the firm is buying them.
An unsecured long-term debt offering by a corporation, promising onlt he general assets as protection for these creditors.
The authority for someone other than the beneficial owner of an account to make investment decisions for that account regarding the security, the number of shares or units, and whether to buy or sell. Decisions concerning only the timing and price do not constitute discretion.
Discretionary Account
An account in which the customer authorizes in writing a broker/dealer or investment adviser to use his judgment in buying and selling securities, including selection, timing, amount, and price. Judgement as to time and/or price only is not considered discretion. Discretionary trades must always be suitable for the customer.
Dual Registration
If a broker/dealer also gives paid investment advise, it must be registered both as a broker/dealer and as an investment adviser. This is known as dual registration. If it gives investment advise only incidentally and does not get paid for it, dual registration is not required.
Effective Date
The date on which a security can be offered publicly if no stop order is submitted to the issuer by the Administrator.
Exempt Security
A security that need not be in formal compliance with a given piece of legislation, such as the SA of 1933, or the Uniform Securities Act as adopted by a state. Examples are US government and municipal securities. No security is exempt from the antifraud provisions of any securities legislation.
Exempt Transaction
A transaction exempt from registration, sales literature, and advertising requirements under the Uniform Securities Act.
Federal Covered Adviser
An Adviser regulated under the Investment Adviser's Act of 1940 or other federal legislation.It has a federally imposed exemption from state securities regulation.
Federally Covered Security
A security with a federally imposed exemption from state registration. States not only need to register such securities; they are not allowed to. Examples: exchange listed securities, investment company shares, and Nasdaq National Market Securities.
A person legally appointed an authorized to represent another person and act on their behalf.