ch.1 Flashcards
Howey test
investment of $, common enterprise, profit, 3rd party management
Person
any entity that may enter into a legally binding contract
Non-person
minor, deceased individual, deemed legally incompetent
Broker-Dealer
affects transactions in securities markets for own account or for others
Agent
individual who represents issuer or BD in purchase or sale of securities with public
Exempt issuers
U.S. govt. state & municipalities, foreign national govt recognized by U.S. commercial paper (maturity > 270 days & 50k+ denom) & contracts with pensions and others.
issuer
person that issues or proposes to issue a security including corporations, U.S. govt and state and local govt
nonissuer
anyone who does not issue or proposes to issue securities, all secondary market transactions.
Investment adviser
actively involved in and receives a fee for issuing reports, advising clients on securities, pension consultant, any advice for a fee.
pension consultants
anyone who advises employees on how to fund their plans.
investment counsel
continuous and regular supervisory or management services
Form ADV, what is it and what is provided to clients?
Provides detailed info about IA, has 4 parts 1A1B2A2B. Parts 2Aand 2B are provided to clients
investment adviser registration database IARD
centralized clearinghouse for all investment adviser registrations.
investment adviser representative
person under control of IA, inlcluding: officers & directors, partners, solicitors, supervisors. Clerical employees are not required to register
Solicitor
anyone who actively seeks new business for IA for compensation. Must be registered.
access person
anyone employed by IA with access to nonpublic info. or anyone that makes recommendations.
institutional investor
person or firm who trades securities for his or her own account or for the accounts of others. note no minimum size for institutional acct.
accredited investor
net worth of 1M excluding primary residence. or 200k annual earnings, or couple earning 300k+ annually
qualified purchaser
individual with 5M in investments, or family-owned business with 5M in investments, trust sponsored by qualified purchasers
private investment company
unregistered investment company or hedge fund that raises funds through sale of securuties to qualified purchasers
offer
any attemp to solicit the purchase or sale of a security for value
sale
ownership must be conveyed for value
guarantee
someone other than the issuer guarantees the interest, principal or dividends
who can guarantee something?
us govt, insurance co, parent company
contumacy
willful display of contempt for the administrator’s order.
federally covered exemption
security listed on exchange (Nasdaq), investment co security, security sold to qualified purchaser
escheatment
= dormant acct
12B-1 fees
charged quarterly, calculated annually, 3 votes to start it, and annually reapprove it.
three votes required to start 12B-1 fee
majority board of directors, noninterested board, and outstanding shares.
two votes required to terminate 12b-1 fees
majority of noninterested board of directors, and outstanding shares
