1. Chapter 22 Investor Protection and Securities Regulation
PowerPoint Slides to accompany The Legal Environment of Business and Online Commerce 4E, by Henry R. Cheeseman
Chapter 22
Investor Protection
and Securities Regulation
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2. Definition of a Security
An interest or instrument that is common stock, preferred stock, a bond, a debenture, or a warrant
An interest or instrument that is expressly mentioned in securities acts
An investment contract
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3. Securities Act of 1933
A federal statute that primarily regulates the issuance of securities by corporations, partnerships, associations, and individuals
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4. Registration Statement
Document that an issuer of securities files with the SEC that contains required information about the issuer, the securities to be issued, and other relevant information
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5. Securities Exempt from Registration
Securities issued by any government in the US
Short-term notes and drafts that have a maturity date that does not exceed nine months
Securities issued by nonprofit issuers
Securities of financial institutions
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6. Securities Exempt from Registration
Securities issued by common carriers
Insurance and annuity contracts issued by
insurance companies
Stock dividends and stock splits
Securities issued in a corporate reorganization where one security is exchanged for another security
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7. Preventing Transfer of Restricted Securities
To protect the nontransferability of restricted securities, the issuer must
Require the investors to sign an affidavit stating that they are buying the securities for investment, acknowledging that they are purchasing restricted securities, and promising not to transfer the shares in violation of the restriction
Place a legend on the stock certificate describing the restriction
Notify the transfer agent not to record a transfer of the securities that would violate the restriction
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8. Securities Exchange Act of 1934
A federal statute that primarily regulates the trading in securities
Securities Exchange
Act of 1934
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9. Tipper-Tippee Liability
A person who discloses material, nonpublic information to another person
Tippee
The person who receives material, nonpublic information from a tipper
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10. Other Federal Securities Laws
Securities Enforcement Remedies and Penny Stock Reform Act of 1990
Market Reform Act of 1990
Racketeer Influenced and Corrupt Organizations Act
Private Securities Litigation Reform Act
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