B Law 2 - Chapter 41
Section 10b insiders
(1) Officers, directors, and employees at all levels of a company, (2) lawyers, accountants, consultants, and agents and representatives who are hired by the company on a temporary and non employee basis to provide services to work to the company, (3) others who owe a fiduciary duty to the company
Security
(1) an interest of instrument that is common stock, preferred stock, a bond, a debenture, or a warrant; (2) an interest or instrument that is expressly mentioned in securities acts; (3) an investment contract
Annual Report
Form 10-K
Quarterly Report
Form 10-Q
Monthly Report
Form 8-K
EGC (Emerging Growth Company)
a class of public company created by the JOBS Act that may issue securities pursuant to specific rules under federal securities law
Due Diligence Defense
a defense to a Section 11 act that, if proven, makes the defendant not liable
Registration Statement
a document that an issuer of securities files with the SEC and that contains required information about the issuer, the securities to be issued, and other relavant information
JOBS (Jumpstart Our Business Startups) Act
a federal statute that is designed to make it easier for start-up companies to raise capital through securities offerings
Insider Trading Sanctions Act
a federal statute that permits the SEC to obtain a civil penalty of up to three times the illegal benefits received from insider trading
Stop Trading on Congressional Knowledge Act (STOCK) Act
a federal statute that prohibits members and employees of Congress, employees of the executive branch, and employees of the judicial branch from using any non-public information derived from the individual's position or gained from performance of the individuals duties for personal benefit
Securities Act of 1933
a federal statute that regulates primarily the issuance of securities by corporations, limited partnerships, and associations
Securities Exchange Act of 1934
a federal statute that regulates primarily trading in securities
Investment Contract
a flexible standard for defining a security
SCOR (Small Company Offering Registration)
a method for small companies to sell up to $1 Million of securities during a 12-month period to the public using a question-and-answer disclosure form called Form U-7
Crowdfunding
a method that allows small companies to raise capital from many small-dollar investors through Web-based platforms
Tipper
a person who discloses material nonpublic information to another person
Section 16 Statutory Insider
a person who is an executive officer, director, or a 10 percent shareholder of an equity security of a reporting company
Tippee
a person who receives material nonpublic information from a tipper
Accredited Investor
a person, corporation, company, institution, organization that meets the net worth, income, asset, position, and other requirements established by the SEC to qualify as an accredited investor
Section 12 of Securities Act of 1933
a provision of the Securities Act of 1933 that imposes civil liability on any persons who violates the provisions of Section 5 of the act
Section 11 of Securities Act of 1933
a provision of the Securities Act of 1933 that imposes civil liability on persons who intentionally defraud investors by making misrepresentations or omissions of material facts in the registration statement or who are negigent for not discovering the fraud
Section 24 of the Securities Act of 1933
a provision of the Securities Act of 1933 that imposes criminal liability on any person who willfully violates the 1933 act or the rules or regulations adopted thereunder
Section 32 of the Securities Exchange Act of 1934
a provision of the Securities Exchange Act of 1934 that imposes criminal liability on any person who willfully violates the 1934 act or the rules or regulations adopted thereunder
Section 10b of the Securities Exchange Act of 1934
a provision of the Securities Exchange Act that prohibits the use of manipulative and deceptive devices in the purchase or sales of securities in contravention of the rules and regulations prescribed by the SEC
Regulation A
a regulation that permits an issuer to sell $50 Million of securities pursuant to a simplified registration process
SEC Rule 10b-5
a rule adopted by the SEC to clarify the reach of Section 10b against deceptive and fraudulent activities in the purchase and sale of securities
Misappropriation Theory
a rule that imposes liability under Section 10b5-1 on an outsider who misappropriates information about a company in violation of his or her fiduciary duty and then trades in the securities of that company
Section 16b of the Securities Exchange Act of 1934
a section of the Securities Exchange Act of 1934 requiring that any profits made by a statutory insider on transaction involving short-swing profits belong to the corporation
Section 5 of the Securities Act of 1933
a section that requires an issuer to register its securities with the SEC prior to selling them to the public
Howey TEst
a test stating that an arrangement is an investment contract if there is an investment of money by an investor in a common enterprise and the investor expects to make profits based on the sole or substantial efforts of the promoter or others
Preliminary Prospectus
a written disclosure document that must be submitted to the SEC along with the registration statement and given to prospective purchasers of securities
SEC Rule 10b5-1
an SEC rule that prohibits the trading in the security of any issuer on the basis of material nonpublic information obtained in a breach of duty of trust or confidence owed to the person who is the source of the information
Non issuer Exemption
an exemption from registration stating that securities transactions not made by an issuer, an underwriter, or a dealer do not have to be registered with the SEC
SEC Rule 506 - Private Placement Exemption
an exemption from registration that permits issuers to raise capital from an unlimited number of accredited investors and no more than 35 non-accredited investors without having to register the offering with the SEC
Intrastate Offering Exemption
an exemption from registration that permits local businesses to raise capitial from local investors to be used in the local economy without the need to register with the SEC
SEC Rule 504 - Small Offering Exemption
an exemption from registration that permits the sale of securities not exceeding $1 Million during a 12-month period
Funding Portal
an internet website that companies may use to issue securities to the public under the crowdfunding provisions of the JOBS Act
Non accredited Investor
an investor who does not met the qualifications to be an accredited investor
Exempt Transaction
an offering of securities that do not have to be registered with the SEC because the offering meets specified requirements established by the securities laws and the SEC
Reporting Companies
companies that must file periodic reports with the SEC and to their shareholders
Scienter
intentional conduct, scienter is required for a violation of Section 10b and Rule 10b-5 to occur
Aiders and Abbettors
parties who knowingly assist principal actors in the commission of securities fraud
Short-Swing Profits
profits that are made by statutory insiders on trades involving equity securities of their corporations that occur within six months of each other
Exempt Securities
securities that are exempt from registration with the SEC
State Securities Law - "Blue Sky" Laws
state laws that regulate the issuance and trading of securities
JOBS Act of 2012
stipulates that a company with assets of at least $10 Million and who have at least 500 "unaccredited" shareholders or 2000 total shareholders is also considered a reporting company
EDGAR
the electronic data and record system of the Securities and Exchange Commission
Securities and Exchange Commission
the federal administrative agency that is empowered to administer federal securities laws; the SEC can adopt rules and regulations to interpret and implement federal securities law, created by 1934 Securities Exchange Act
IPO (Initial Public Offering)
the sale of securities by an issue to the public
Insider Trading
when an insider makes a profits by personally purchasing shares of a corporation prior to the public release of favorable information or by selling shares of a corporation prior to the public disclosure of unfavorable informatoin
