Business Law- Securities and Exchange Commission/Securities Act of 1933

Regulation A offerings

-dont exceed 5 million in securities during an 12 month period -the issuer must file with the SEC a notice of the issue and an offering circular, which must be provided to investors before sale

Waiting Period

-during the waiting period, the securities can be offered for sale but cannot be sold by the issuing corporation -can distribute a preliminary prospectus (contains most of the information that will be included in the final prospectus but often doesn't include a price) -freewriting prospectus

The Securities Act of 1933

-governs initial stock of business -prohibit fraud and stabilize the securities industry by requiring that investors receives financial information concerning the securities being held for public sale

Registration Statement

-if a security doesn't qualify for exemption, that security must be registered before it is offered to the public -issuing corporations must file a registration statement with the SEC and must provide all investors with a prospectus

Well Known Seasoned Issuers

-is a firm that has issued at least 1 billion dollars in securities or 700 million of value of outstanding stock in the hands of the public -can file registration statements the day they announce a new offering and are not required to wait for the SEC review or approval

504

-is the exemption of most small businesses -non-investment company offerings up to $1 million in any 12 month period are exempt

Posteffective Period

-issues can now offer and sell securities without restrictions

505

-private, non investment company offerings up to 5 million in any 12 month period -unlimited accredited investors and 35 uncredited investors

Pre-filing Period

-the issuer normally cannot sell or offer to sell the securities -once registration statement has been filed, a waiting period begins while the SEC reviews the registration statement

Registration Process

1. Pre-filing period 2. Waiting Period 3. Post-effective Period

What is a security?

1. instruments commonly known as securities (preferred and common stock, treasury stocks, bonds) 2. any interests commonly known as securities 3. notes, instruments, or other evidence of indebtedness 4. any fractional undivided interest in oil, gas, or other mineral rights 5. Investment contracts

The basic functions of the SEC are:

1. interprets federal securities laws and investigates violations 2. issues new rules and amends existing rules 3. oversees the inspection of securities firms, brokers, investments advisors, and rating agencies 4. oversees private regulatory organizations 5. coordinates U.S. securities regulation with federal, state, and foreign authorities

Contents of the Registration Statement

1. the securities being offered for sale 2. the corporation's properties and business 3. management of the corporation 4. how the corporation intends to use the proceeds of the sale 5. any pending lawsuits or special risk factors

Prospectus

a disclosure statement that describes the security being sold, the financial operations of the issuing corporation, and the investment or risk attached to it

Freewriting prospectus

any type of written, electronic, or graphic offer that describes that issuer or its securities and includes a legend indicating that the investor may obtain the prospectus at the SEC's website

Rule 144

exempts restricted securities from registration on resale if all of the following conditions are met: 1. there is adequate current public information 2. the person selling the securities has owned them for at least 6 months 3. the securities are sold in certain limited amounts in unsolicited brokers' transactions 4. the SEC is notified of the resale

Investment contract

is any trisection in which a person 1. invests 2. in a common enterprise 3. reasonably expecting profits 4. derived primarily or substantially from others managerial or entrepreneurial efforts

SEC

plays a key role in interpreting the provisions of these acts and their amendments in creating regulations governing the purchase and sale of securities

Regulation D

-504, 505, 506 -for offers that either involve small dollar amount or are made in a limited manner

Securities Exchange Act of 1934

created the Securities and Exchange Commission (SEC)

506

private, non investment company offerings in unlimited amounts that are not generally advertised or solicited -unlimited accredited and 35 unaccredited investors -unaccredited investor must has significant knowledge -the private placement exemption is perhaps the most important exemption for forms that want to raise funds through the sale of securities

Rule 144A

securities that at the time of issue were not of the same class as securities listed on a national securitries exchange or quoted in a U.S. automated inter dealer quotation system and may be sold under rule 144A -only sold to a qualified buyer -buyer has to know that the seller is relying on the exemption under rule 144A