Lecture 8

Lecture 8 - Players in the Market Suppliers of capital...

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Lily Qiu, Assistant Professor Economics Department, Brown University EC1710, Lecture 7, Spring 2010, page 1 Players in the Market 1. Regulatory agencies The Securities and Exchange Commission (the SEC) a. nonpartisan quasi-judicial agency established by the Securities Exchange Act of 1934 b. fve commissioners appointed by the U.S. President with the advice and consent of the Senate, each For a fve-year term; terms are staggered; one expires on June 5th every year. No more than three commissioners shall be from the same political party. 11 regional and district o ces. c. serves as an advisor to federal courts in corporate reorganization proceedings under Chapter 11 of the Bankruptcy Reform Act of 1978. Has no authority to bar the sale of securities of questionable value. d. divisions: Corporate Finance; Market Regulation; Investment Management; Enforcement; Compliance Inspection and Examinations. The Commodity Futures Trading Commission (the CFTC) The Federal Reserve System Self Regulatory Organizations (SROs) – The NASD, the NYSE, etc. The Institute of Chartered ±inancial Analysts‟ Code oF Ethics and ProFessional Conduct Suppliers of capital Households with savings Firms with cash Markets The Money market The bond market The equity market Intermediaries Banks, S&L Pension funds Investment companies Insurance companies Investment advisors Users of capital Firms which want to invest Governments who want to spend Households which want to buy a house
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Lily Qiu, Assistant Professor Economics Department, Brown University EC1710, Lecture 7, Spring 2010, page 2 2. Regulations The 1933 Securities Act: “truth in securities” law Disclosure requirements in the primary market in the form of the registration statement and „prospectus‟: company‟s properties and business; the description of the security to be o f ered for; the management of the company; and Fnancial statements certiFed by independent public accountants. Exemptions are: (1) private placement (2) intra-state issue (3) banks, S&Ls etc.
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Lecture 8 - Players in the Market Suppliers of capital...

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