Preview

Securities Regulation Outline - Rose

Powerful Essays
Open Document
Open Document
20479 Words
Grammar
Grammar
Plagiarism
Plagiarism
Writing
Writing
Score
Score
Securities Regulation Outline - Rose
Securities Regulation – Spring 2012 (Rose) Outline
Class 1 Slides

Federal Securities Regulation Seeks to:
1. Increase the amount of information available to investors about issuers through mandatory disclosure rules; and
2. To deter fraud (so the information disclosed is credible).

Ultimate Goal: The accurate pricing of securities, which is essential to a well-functioning economy.
How Securities Differ Importance of capital markets to society Importance of investment decisions to individuals Heightened concerns about irrationality Heightened informational asymmetries due to intangibility Collective action problems
Type of Security Cash Flow Rights Liquidation Rights Voting Rights
Common Stock (equity) jr Residual and discretionary dividend Residual Yes
Preferred Stock (equity) Fixed and discretionary div. (cumulates if not paid) Medium Contingent
Bonds (debt) sr Fixed and Certain interest payments Highest None
Capital Markets Overview
• Terminology o Primary Market: Issuer -- Investor
• Governed primarily by Securities Act of 1933
• Private placements
 Issue or sale of securities that are not a public offerings
• Doesn't require as much disclosure
• IPOs
 First time a company achieves public company status
• Seasoned public offerings
• Other offerings
• Major players
 Broker-Dealers
 Underwriters
• Typically in IPO buy stock from issuer and sell it to the public at a higher price (the difference = compensation)
• Offer advice on how to price the securities and promote them
 Attorneys
 Accounting Firms
• Audit financial statements
• Lend reputational capital
 Institutional Investors
• Participate in IPOs
• e.g., insurance companies, mutual funds, public pension funds o Secondary Market: Investor -- Investor
• Governed primarily by Securities Act of 1934
• Volume of shares: secondary distribution
• Plays out in national securities exchanges
 e.g., NYSE, AMEX, NASDAQ
• Provide important

You May Also Find These Documents Helpful

  • Powerful Essays

    The SEC assists in providing investors with reliable information upon which to make investment decision. The Securities Act of 1933 requires most companies planning to issue new securities to the public to submit a registration statement to the SEC for approval. The Securities Exchange Act of 1934 provides additional protection by requiring public companies and others to file detailed annual reports with the commission. Smackey Dog Food, need to file next forms:…

    • 2716 Words
    • 11 Pages
    Powerful Essays
  • Powerful Essays

    For a private company to raise money in the financial markets an initial public offering (IPO) has some advantages. One of the first benefits is generating revenue from the sale of shares of stock in the company. The company’s owners gain liquidity in their share of the company. This liquidity makes it easier for the owners to sell their interests in the company. Going public gives the company access to the public markets in the…

    • 1586 Words
    • 7 Pages
    Powerful Essays
  • Better Essays

    One of the first advantages of an IPO that a company will realize is an increase in…

    • 2183 Words
    • 9 Pages
    Better Essays
  • Good Essays

    Law 421 Week 1 Summary

    • 1057 Words
    • 5 Pages

    Among other measures, SOX extended the statute of limitations for the SEC to pursue actions and increased penalties at their disposal. SOX changed the balance of power between companies and prosecutors, putting prosecutors in the driver’s seat (Maleski, 2012). With the disclosures made clear and the facts of what is required of public companies, it is easier for agency’s to pursue enforcement. The core values when making disclosures have become clear since SOX extended the statute of…

    • 1057 Words
    • 5 Pages
    Good Essays
  • Good Essays

    Acc550 Week 3

    • 1538 Words
    • 7 Pages

    E5-2 (Classification of Balance Sheet Accounts) Presented below are the captions of Nikos Company’s balance sheet.…

    • 1538 Words
    • 7 Pages
    Good Essays
  • Powerful Essays

    Corporations selling stock to the public must disclose their financial and operating information to both the public and the Securities and Exchange Commission.…

    • 1214 Words
    • 5 Pages
    Powerful Essays
  • Good Essays

    Riordan Manufacturing

    • 549 Words
    • 3 Pages

    An Initial Public Offering (IPO) is the first time a company issues stock to the public. According to Bateman and Snell, “Initial public stock offerings (IPOs) offer a way to raise capital through federally registered and underwritten sales of shares in the company” (2011, pg. 255). There are various advantages to going public. An IPO may raise capital, reduce debt, improve the balance sheet, and enhance net worth. Riordan may be able to pursue unaffordable opportunities and improve credibility with customers. Investors may be attracted to the company now.…

    • 549 Words
    • 3 Pages
    Good Essays
  • Better Essays

    FIN 516 IPO Paper

    • 1324 Words
    • 4 Pages

    An Initial Public Offering (IPO) is when a private company sells its first stock to the public. This is usually done by company’s who are smaller and or “younger” looking to raise capital in order to expand. It can however be done by larger private companies that want to become public. IPO’s can be a risky investment, as the investors do not know how the stock will do on its first day of trading, in addition, there are not much historical data either. In August 2010, Gevo Inc., filed for IPO with the SEC, which went public in January 2011.…

    • 1324 Words
    • 4 Pages
    Better Essays
  • Better Essays

    The Sarbanes-Oxley Act

    • 1467 Words
    • 6 Pages

    Sarbanes-Oxley Act Section 409 is the section that is relevant to Real Time Issuer Disclosures. In this section the issuers are obliged to reveal to the community, on a pressing basis, instructions on a significant transformation in their financial situation for ventures. Nevertheless, these discoveries are to be offered in conditions that are unproblematic to grasp, maintained by tendency and qualitative material of vivid appearances as applicable (The Sarbanes-Oxley Act 2002,…

    • 1467 Words
    • 6 Pages
    Better Essays
  • Satisfactory Essays

    Based on the requirements of the Sarbanes-Oxley Act and SEC reporting requirements for publically traded companies,…

    • 256 Words
    • 1 Page
    Satisfactory Essays
  • Better Essays

    * The financial market where previously issued securities such as stocks and bonds are bought and sold.…

    • 895 Words
    • 4 Pages
    Better Essays
  • Better Essays

    Sarbanes Oxley Act o

    • 1242 Words
    • 4 Pages

    Several laws and regulations have been developed to attempt to control business practices. Corporations must follow rules that were established to protect the public from fraud such as fair practice laws, and regulatory agencies must ensure compliance with these long-standing regulations. The U.S. Securities and Exchange Commission, (SEC), “was developed to help protect investors, maintain fair, orderly, and efficient markets, and facilitate capital information” (U.S. Securities and Exchange Commission, 2015). The SEC was created in 1934 in response to the loss of public confidence in financial markets after the stock market crash of 1929 and the years following the Great Depression. The main goal of establishing the SEC was to restore investor confidence in the markets by providing more precise and reliable information for investors and creating an environment that protected the investor first. Both public and private investors can invest in corporations, and the SEC requires disclosure of meaningful financial information so that those investors can make sound investment decisions (U.S. Securities and Exchange…

    • 1242 Words
    • 4 Pages
    Better Essays
  • Powerful Essays

    History of Sox

    • 2863 Words
    • 12 Pages

    4. Enhanced Financial Disclosures . . . . . . . . . . 9…

    • 2863 Words
    • 12 Pages
    Powerful Essays
  • Satisfactory Essays

    Weekly Problems

    • 529 Words
    • 3 Pages

    The SEC requires full disclosure from companies that wish to be publicly traded on the major U.S. Exchanges. By enforcing the rule, the SEC attempts to instill confidence in investors that the financial marketplace is efficient and transparent so that individual investors can take part in it for material profit.…

    • 529 Words
    • 3 Pages
    Satisfactory Essays
  • Good Essays

    Some of the ways that the Private Securities Reform Act of 1995 changed both the responsibilities and at the same time benefited auditors…

    • 1275 Words
    • 6 Pages
    Good Essays