primary markets

primary markets - THE PRIMARY MARKETS Financial markets can...

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Unformatted text preview: THE PRIMARY MARKETS Financial markets can be categorized as those dealing with newly issued financial claims, called the primary market; and those for exchanging financial claims previously issued, called the secondary market, or the market for seasoned securities.We will focus on the primary market for securities. Regulation of the issuance of securities: Regulation of the issuance of securities: Underwriting activities are regulated by the Securities and Exchange Commission. The Securities Act of 1933 governs the issuance of securities. The act requires that a registration statement be filed with the SEC by the issuer of a security. The type of information contained in the registration statement is the nature of the business of the issuer, key provisions or features about the security, the nature of the investment risks associated with the security, and the background of management. The registration is actually divided into two parts. Part I is the prospectus. This part is typically distributed to the public as an offering of the securities. Part II contains sup-plemental information, which is not distributed to the public as part of the offering but is available from the SEC upon request. SHELF REGISTRATION RULE SHELF REGISTRATION RULE In 1982 the SEC approved Rule 415, which permits certain issuers to file a single registration document indicating that it intends to sell a certain amount of a certain class of securities at one or more times within the next 2 years Rule 415 is popularly referred to as the shelf registration rule because the securities can be viewed as sitting on a "shelf' and can be taken off that shelf and sold to the public without obtaining additional SEC approval. CONTINUED REPORTING CONTINUED REPORTING Any company that publicly offers a security in the United States becomes a reporting company and, as such, is subject to the Securities Exchange Act of 1934. This act specifies that a reporting company file with the SEC annual and periodic financial reports. The financial reports must be prepared according to generally accepted accounting principles (GAAP). PRIVATE PRIVATE PLACEMENT OF PLACEMENT OF SECURITIES SECURITIES Public and private offerings of securities differ in terms of the regulatory requirements that must be satisfied by the issuer. The Securities Act of 1933 and the Securities...
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This note was uploaded on 03/06/2012 for the course BUS 170 taught by Professor Bill during the Spring '12 term at Everett CC.

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primary markets - THE PRIMARY MARKETS Financial markets can...

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