Securities Regulation and Registration Flashcards

Vocabulary flashcards covering the fundamentals of securities, major regulatory acts, exemptions, and registration processes.

Security

A financial instrument representing ownership, debt, or rights.

Issuer

Entity that creates/sells securities.

Issuer transaction

A transaction where the proceeds go to the issuer.

Nonissuer transaction

A transaction where the proceeds go to the seller.

Exempt security

A security that does not require registration.

Examples of exempt securities

Govt, muni, bank, nonprofit, insurance.

Commercial paper

An exempt short-term security with a duration of $\le 270$ days.

Exempt transaction

A transaction that avoids registration.

Unsolicited transaction

A client initiated trade.

Private placement

A limited sale of securities under Reg D.

Rule 506(b)

An exemption allowing unlimited accredited investors and $35$ nonaccredited investors, but no advertisements.

Rule 506(c)

An exemption where advertisements are allowed, but all investors must be accredited.

Accredited investor

An investor who meets specific income or net worth thresholds.

Rule 147

The intrastate offering exemption.

$80\%$ rule

Requirement that issuer activity be conducted mostly in one state for intrastate exemptions.

Resale restriction (intrastate)

A period of $6$ months during which certain securities cannot be resold.

1933 Act

Legislation with the purpose of disclosure for new issues.

Prospectus

A document providing offering details.

Red herring

A preliminary prospectus.

Cooling-off period

A waiting period before sales that lasts a minimum of $20$ days.

Blue Sky laws

State securities laws.

Administrator

The state regulator for securities.

Qualification

A state-only registration process.

Coordination

Securities registration involving both the SEC and the state.

Notice filing

Registration method used for federal covered securities.

Federal covered securities

Securities exempt from state registration, such as NYSE stocks, mutual funds, and Rule $506$ offerings.

Restricted securities

Securities that cannot be freely resold.

Control securities

Securities owned by insiders.

Rule 144

The resale rule for restricted and control stock.

1934 Act

Legislation governing the secondary market.

NSMIA

The act that created federal covered securities.