Securities Regulation

Question 1

What is a security?

Answer 1

A passive investment

Meaning the investor isn’t an active participant in running the business.

Question 2

List 2 of the most common investments

Answer 2

Stocks

Bonds

Question 3

What is the main difference between the Security Acts of 1933 and 1934?

Answer 3

1933 covers the regulation of securities that are offered to the public for the first time.

1934 covers regulation of securities when they are trading between investors.

Question 4

What act requires registrants to register with the SEC?

Answer 4

Securities Act of 1933

Question 5

What’s the difference between a public offering and an initial public offering?

Answer 5

A public offering is the first time some stocks are offered to the public. An initial public offering (IPO) is the first time the company offers stocks to the public.

Question 6

What 2 documents comprise the registration of a security?

Answer 6

Prospectus

Registration Statement

Question 7

What is a prospectus?

Answer 7

A lengthy document that includes:

Why the company is raising money
How it will use the funds
Firms audited financial statements

Question 8

What is a Registration Statement?

Answer 8

It precedes the prospectus, giving investors information before the prospectus is complete.

Question 9

Which type of securities are exempt from registering with the SEC?

Answer 9

1. Intrastate Sales
2. Commercial Paper
3. Insurance policies
4. Securities issued by Non-profit and religious organizations