9 Regs of Sec & Issuers Flashcards
Howey Decision
US Supreme Court
define investment contract (4)
- inv of $
- involves common enterprise
- investors expect to make $
- profits derived from others efforts than the investor
non-securities not regulated by
Uniform Securities Act (USA)
include
- fixed annuity
- futures contract (option on futures contract is a SEC)
- retirement plans (IRA, Koegh)
- single stock future contract
financial instruments with “certificate”in them are often SEC
exception
cert of deposit (CDs) offered by bank
Securities Registration
state/fed
by whom
exempt at state if fed reg
by UW or BD
Securities Registration
valid how long
1 yr from registration
state sec admin approval for early w/d
Securities Registration
must disclose
on what form
amt issued
other states where it has been registered
any previous adverse regulatory actions
Form S-1 - registration statement
Securities Registration Statement
found where
SECs EDGAR
Electronic Data Gathering Analysis & Retrival system
Securities Registration - State
3 Registration Methods
- Registration by Qualification
- Registration by Coordination
- Registration by Filing
new issue, most laborious
requires
- nature of bus & key assets
- sec details - price, number etc
- amt $ collected by offering
- value of existing stocks and bonds
- balance sheet, no more than 4 mo. old
- officers owing > 10% SEC (address, 5 yr work history, 12 mo pay past and future
- pendig lawsuits
- prospectuses, ads related ot issue
- sample of actual sec
- intended use
- description of stock options
Securities Registration - State
3 Registration Methods
- Registration by Qualification - prospecuts delivery requirement
- Registration by Coordination
- Registration by Filing
to investors by which ever comes first
- confirmation of sale made
- delivery of SEC pursuant to such sale
includes
- name of sec & issuer
- type of SEC
- amt. and denomination
- info about issuer & parties aiding in sale
3 Registration Methods
- Registration by Qualification
- Registration by Coordination
- Registration by Filing
coordiantes state & fed filings
reg 1st time with fed and several states at same time
file w/ fed before states
3 Registration Methods
- Registration by Qualification
- Registration by Coordination - paperwork
- Registration by Filing
- 3 copies of prospectus
- articles of incorp
- agreement between issuer and UW
- copy of security
3 Registration Methods
- Registration by Qualification
- Registration by Coordination - effective
- Registration by Filing
state reg becomes effective when fed is effective (if stmt has been on file w/ state for at least 10 days)
- issuer net worth of 4MM
- public holds 400,000 shares
- UW cannot holdover 10%
- UW members of NASD
- UW comm < 10%
3 Registration Methods
- Registration by Qualification
- Registration by Coordination
- Registration by Filing
option for issuers that have reg SEC federally, meeting following
- issuer is organized under US laws, state laws, or agent in US
- been in bus in US for past 36 mo
- has SEC registred under 1934 held by 500 shareholders
- 4 MM for at least 30 days during 3 mo preceeding the offering
- stock issued for >$5 / share
3 Registration Methods
- Registration by Qualification
- Registration by Coordination
- Registration by Filing - info for state admin
- statement of eligibility
- description of SEC
- prospectus
Notice Filing
notice to stat that fed covered sec will be offered
(used instead of state registration)
easiest
expires 1 year after effective date
Expiration Dates
individuals & firms
vs
securities
- Dec 31st
- 1 year from effective registration
USA Exemptions - no registration req
- 402(a) - security
- 402(b) - transactions
- US govt & muni
- foreign govt
- depository securities (CD, bank)
- Loan Assoc. - US savings and loan
- Ins Co SEC
- Credit Union SEC
- Putlic Utilitiy SEC
- Exchange traded
- Non Profit
- Commerical Paper
- EE Bene Plan - admin notified 30 days befor inception
USA Exemptions - no registration req
- 402(a) - security
- 402(b) - transactions
- Isolated non-issuer transactions (btwn 2 private parties)
- Senior Sec (non-issuer senior in rank to issuer stock)
- Fed reg on file for 180 days
- Unsolicited
- UW transactions
- Whole mortgage backed bond
- Bankruptcy or fiduciary tansactions
- Transactions by pledgee - sec put as collateral
- Institutional invest
- Private placement
- Preorg Cert Trans - no comm, <10 peps, no pmt to subscriber
- Trans w/ existing sec holders - no comm
- Offers to sell but not actual sell
- non-issuer distribution
- Small offerings - max 1MM, no single inv purchases > 2k or 5% of investor net worth
Issuer vs Non- Issuer transactions
- Issuer - IPO - proceeds to to issuer (UW or Primary Mkt)
- sales proceeds go to party other than issuer
Offer Examples
- warrent or right
- sec given as a bonus for selling other sec
- gift of assessable stock
- sales calles
- mailed mkt material
Assessable vs Non Assessable
Assessable - fees for future improvements
Assessable - is both offer and sale of SEC
Non- Assessable - neither offer or sale of SEC
Fed Registered SEC
not reg by state
- NYSE or other natl stock exg
- investment co issues under 1940
- senior to existing that are already reg at fed
