Securities Law Dictionary

Accredited Investor Definition

Under the federal securities laws, while a company may not offer or sell securities without registration with the SEC, there are a number of registration exemptions. Many exemptions require that the offering be made only to persons who are accredited investors. Unlike offerings registered with the SEC in which certain […]

Churning – Definition and Cases

Churning – in a churning claim, the customer alleges that the broker purchased and sold securities solely to generate commissions, without regard to the customer’s investment objectives or goals. In the typical churning case, the customer must prove: 1) that the broker controlled the account; 2) that the trading was […]

Rule 504

SEC’s Fast Answers – Rule 504

Rule 504 of Regulation D provides an exemption from the registration requirements of the federal securities laws for some companies when they offer and sell up to $1,000,000 of their securities in any 12-month period. A company can use this exemption so long as it is not a blank check […]

Rule 504

SEC Fast Answers – Rule 506

From the SEC’s “Fast Answers” Page: Rule 506 of Regulation D Rule 506 of Regulation D is considered a “safe harbor” for the private offering exemption ofSection 4(a)(2) of the Securities Act. Companies relying on the Rule 506 exemption can raise an unlimited amount of money. There are actually two […]

Who regulates the stock market in the US?

The stock market has many different regulators. The primary regulator is the Securities and Exchange Commission. The stock markets are governed by their own organizations, under the direction of the SEC. Stock brokers and brokerage firms are regulated by the Financial Industry Regulatory Authority (FINRA) which was formerly known as […]

Securities and Exchange Commission (SEC)

  The U.S. Securities and Exchange Commission (SEC) is an agency of the United States federal government. It holds primary responsibility for enforcing the federal securities laws, proposing securities rules, and regulating the securities industry, thenation’s stock and options exchanges, and other activities and organizations relating to stock, securities and […]

FINRA – Financial Industry Regulatory Authority

The Financial Industry Regulatory Authority, known as FINRA, is a private corporation which is known as a “self regulatory organization.” meaning that is has the authority to regulate its membership. FINRA is the primary regulator for the securities industry, and is responsible for the oversight of the country’s brokerage firms, […]

Control person liability requires culpable participation.

Control person liability does not lie unless the controlling person was, in some meaningful sense, a culpable participant in the fraud. General deficiencies in supervision, are insufficient, liability requires culpability regarding specific trades and misrepresentations. Wallace v. Buttar, 02 Civ. 4297(RWS) (S.D.N.Y. 1/8/03). Appealability * Award Challenge * Vacatur of […]