Securities and Antitrust

Vocabulary

antitrust law

rule banning certain acts that interfere with the normal operation of markets by putting limits on the ability of companies to build monopolistic power

bond

long-term investment instrument that requires a corporation to return the amount of the initial investment with interest and that is secured by some collateral, such as real property or cash flow

common stock

interest in a corporation that includes specified rights but no guarantee of a financial return

coupon rate

fixed rate of return paid by a bond that is stated on its face and is paid in quarterly, semiannual, or annual installments

debenture

long-term investment instrument that requires a corporation to return the amount of the initial investment with interest and that is not secured

division of markets

agreements among competitors in a market not to compete with each other in specific parts of the market

exclusive agreement

agreement between a supplier and a buyer that the buyer will not purchase a product from anyone other than the supplier

group boycott

agreement between two or more competitors not to sell products to specific buyers

insider trading

illegal use of material, nonpublic information to trade on the stock exchange for one's own benefit

interlocking directorate

situation in which one or more persons serve on the boards of directors of competing firms

markets

trade and commerce in goods or services bought and sold at prices set by supply and demand

merger

combination of two or more existing firms into a new firm that continues the businesses of the old ones

monopoly

market in which there is only one seller, meaning that that buyers have only one source of a product

per se antitrust violation

specific action that violates the Sherman Antitrust Act, whether or not the action affects the market

preferred stock

interest in a corporation that includes rights superior to the rights of common stockholders. Preferred stock usually pays a dividend that the company must pay out before paying dividends on common stock.

price discrimination

when sellers charge different customers different prices for the same product based on what they are willing to pay

price-fixing

agreement among two or more competitors to sell a specific product at a set price

registration statement

information about a security and the firm issuing it that must be filed with the Securities and Exchange Commission before the security can be sold publicly

restraint of trade

action or agreement that imposes restrictions on commerce that improperly interferes with the free conduct of business

Rule 10b-5

provision of the Securities and Exchange Act of 1934 that prohibits fraud in any sale or purchase of a security

rule of reason

idea that a court weighs the benefits of an action that is in restraint of trade against the harm to commerce that results from the action

Section 5

part of the Securities Act of 1933 that requires a registration statement for securities to be offered to the public

securities fraud

deceptive practice in which someone provides false information to influence investments or the purchase or sale of securities

security

any interest in an enterprise where the investor expects a financial return that will result mainly from others' efforts. Stocks and bonds are examples of securities.

trust

firm that controls several competitors or all competitors in the same market