Securities in the USA ANNA NICK EXCLUSIVELY

Securities in the USA ANNA & NICK EXCLUSIVELY FOR LEGAL ENGLISH CLUB

Regulations That Govern Securities Act of 1933 Securities Exchange Act of 1934 The U. S. Uniform Commercial Code Trust Indenture Act of 1939 Investment Company Act of 1940 Investment Advisers Act of 1940 Sarbanes-Oxley Act of 2002 Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 Jumpstart Our Business Startups Act of 2012 Revised Model Business Corporation Act “Blue Sky Laws” Rules and Regulations

Securities Act of 1933 Provision of significant financial information about securities being offered for public sale for investors Prohibition of deceit, misrepresentations and fraud Disclosure through the registration of securities Recovery of investors’ losses if there was incomplete or inaccurate disclosure of important information Private offerings to a limited number of persons or institutions, offerings of limited size, intrastate offerings and securities of municipal, state and federal governments are not required to be registered Registration statements of the issuer are subject to examination for compliance

Securities Exchange Act of 1934 Securities and Exchange Commission (SEC) SEC is empowered to register, regulate and oversee brokerage firms, transfer agents, clearing agencies and the nation’s securities selfregulatory organizations (SRO) such as New York Stock Exchange, the NASDAQ Stock Market, the Chicago Board of Options and the Financial Industry Regulatory Authority Companies with more than $10 million in assets whose securities are held by more than 500 owners must file annual and other periodic reports Disclosure of important information by anyone seeking to acquire more than 5 percent of a company's securities by direct purchase or tender offer Insider trading is illegal unless there is no duty to withhold the information or refrain from trading imposed

Sarbanes-Oxley Act of 2002 Public company accounting oversight board Auditing, quality control, and independence standards and rules Inspections of registered public accounting firms Applicability to certain foreign firms Corporate responsibility for financial reports Corporate and criminal fraud accountability

Market Structure Major institutional investors (insurance companies, pension and investment funds, banks) Depositaries Clearing corporations Depositary Trust Company (DTC), a subsidiary of the New York Stock Exchange Cede & Co. is a nominee of DTC. In fact, it possesses over 70% of all shares traded on the U. S. stock market Minor investors (nominal owners like brokerage companies or trusties and their beneficiaries – shareholders)

What Are Securities The term ‘‘security’’ means any note, stock, treasury stock, security future, security-based swap, bond, debenture, evidence of indebtedness, certificate of interest or participation in any profit-sharing agreement, collateral-trust certificate, preorganization certificate or subscription, transferable share, investment contract, voting-trust certificate, certificate of deposit for a security, fractional undivided interest in oil, gas, or other mineral rights, any put, call, straddle, option, or privilege on any security, certificate of deposit, or group or index of securities (including any interest therein or based on the value thereof), or any put, call, straddle, option, or privilege entered into on a national securities exchange relating to foreign currency, or, in general, any interest or instrument commonly known as a ‘‘security’’, or any certificate of interest or participation in, temporary or interim certificate for, receipt for, guarantee of, or warrant or right to subscribe to or purchase, any of the foregoing (sec. 2(1) Securities Act of 1933)

The Howey Test Invented by the Supreme Court in Sec v. Howey Co. (1946) Four features of an investment contract for securitization scheme: A person invests his money in a common enterprise A person is led to expect profits solely from the efforts of the promoter or a third party It is immaterial whether the shares in the enterprise are evidenced by formal certificates or by nominal interests in the physical assets employed in the enterprise It does not matter whether the enterprise is speculative or promotional in character

Financial Instruments Investment securities: equity securities (stocks) debt securities options convertible bonds share certificate Negotiable instruments Document of title Quasi-negotiable

Asset Securitization Asset-backed securities (ABS) Commercial real estate securities (CMBS) Residential mortgage-backed securities (RMBS) Collaterized debt obligations (CDO) For example, RMBS is comprised of a pool of mortgage loans created by banks and other financial institutions. The cash flows from each of the pooled mortgages is packaged by a specialpurpose entity (special purpose vehicle, SPV) into classes and tranches, which then issues securities and can be purchased by investors. CMBS is secured by mortgages on commercial properties, instead of residential real estate. CDO is a structured financial product that pools together cash flow-generating assets and repackages this asset pool into discrete tranches that can be sold to investors.

To Deepen the Knowledge SEC Official Website https: //www. sec. gov/rules. shtml Model Guide to Securitisation Techniques. Slaughter and May Official Website https: //www. slaughterandmay. com/media/1429118/model_guide_to_ securitisation_techniques. pdf Transfer and servicing of financial assets. Pw. C Review. 2 nd edition, March 2016. Pw. C Official Website http: //www. pwc. com/us/en/cfodirect/assets/pdf/accountingguides/pwc_transfer_2013. pdf

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