Chapter 1 - Section 3 Flashcards
What is rule 10b-5?
Catch-all rule
What are the general provisions of 1934 Act?
Manipulation Insiders SEC created Short sale rules Proxy rules Exchanges Reports Margin Stabilization
What are prohibited manipulation activities?
Wash trades
Trading pools
Trading by underwriters of a primary offering before effective date
Short tendering
What is a 13D filing?
Report required to be filed by anyone who accumulates a 5% position in a company
What is Reg T?
Controls credit from broker to customer
What is Reg U?
Controls credit from bank to broker
What’s a 10K?
Audited, annual reports corporations file with SEC
What’s a 10Q?
Unaudited, quarterly reports corporations file with SEC
What’s an 8K?
Reports of special events corporations file with SEC
What’s rule 10b-2?
Prohibits issuers and underwriters from influencing the price of a new issue in the aftermarket
What’s the short tendering rule?
Tenders can only be made of net long positions of shares (no short tendering)
What’s an insider?
Officer, director, or 10% shareholder in a company
What are the insider rules?
No trades based on insider info
Short swing (6 mo) profits paid back
No selling short (but can short against the box at year-end if position closed within 20 days)
Tipper & tippee liable
What does the SEC regulate?
Securities only
What is Regulation SHO?
Every order must be marked long or shot
When must proxy materials be filed with SEC?
10 days before sent to shareholders
What’s the net capital rule?
Firms must meet minimum “liquid capital” standards
How must a firm treat fully paid customer securities?
Segregated and placed in safekeeping
What are excess margin securities?
Those with more than 140% of debit balance
What is a free cash balance?
Uninvested cash balances held at brokerage firms
What notification is required of free credit balances?
Quarterly, with amount, FYI that funds available and not segregated
What notification is required of B/D financial condition?
Semi-annual financial statements, including statement of financial condition & net capital computation
What are stabilization rules?
One bid
At or below POP
Notice of Stabilization must appear
Bid withdrawn when syndicate disbands
What’s rule 10b-4?
Short tender rule - can only tender if long position
What’s a long position?
Owns stock
Owns convertible stock
Owns rights, warrants or call options
What’s a net 0 postion?
No ownership; can’t tender
What’s rule 10b-9?
Prohibits misrepresentation of “all or none” underwritings
What’s rule 10b-13?
Prohibits purchase of security in market after tender offer is announced
What’s rule 10b-18?
To buy their own shares, issuers must:
Use 1 B/D per day
No opening transactions
Not within 10 mins of close (actively traded)
Priced at current highest ind. bid OR last reported sale
Less than 25% of daily trading
What’s Regulation M?
FIX
