69-83 Flashcards
Type of Shares
Common stock or other classes of stock with a unique bundle of rights to attract investors for the corporation.
Dividends
Payments made to shareholders that come from the earnings of stock.
Proxy
Power of attorney given by shareholders to another to vote on behalf of their shares.
Shareholder Agreements
Agreements between shareholders of a corporation / and the means of attaining control over corporate affairs.
Insider
A person who has a fiduciary relationship with a corporation / requiring him to keep non-public information confidential.
Common law Insider Trading
When a corporate officer or director profits from buying or selling stock using inside information.
Special Facts Doctrine
Doctrine holding that corporate director or officer with SUPERIOR KNOWLEDGE gained by being an insider /owes a fiduciary duty to disclose information with shareholders when it’s fair to do so.
Rule 10b-5
It’s unlawful for any person, directly or indirectly, by means of interstate commerce or mail, or any facility of national securities exchange, to use any fraudulent or manipulative devices in connection with the purchase of securities.
Tipper
Insider who discloses inside information/ for trading or other personal purposes.
Tippee
Non-insider who receives inside information from a tipper / and is liable if he trades knowing there was a breach of fiduciary duty made by the tipper.
Classic Theory and Personal Benefit
A corporate insider who tips inside information to an outside party may be liable if they personally benefited from the tip.
Misappropriation Theory
A person who wrongfully uses confidential information to buy or sell securities in violation of a duty owed to one who is the information source, is guilty of securities fraud.
Securities and Exchange Commission
Five member federal agency that regulates the issuance and trading of securities to protect investors against fraud or unfair practices.
16b 1934
Prohibits short swing trading by insiders and requiring that any profits made within a 6 month period through a purchase and sale of securities, by a director, officer, or beneficial owner of more than 10% of stock, be returned to the corporation.
