Series 55

AAA

Issuing Corporate Securities - Introduction

The Securities Act of 1933 was the first major piece of securities industry regulation that was brought about largely as a result of the stock market crash of 1929. Other major laws were also enacted to help prevent another meltdown of the nation’s financial system such as The Securities Exchange Act of 1934, but we will start our review with the Securities Act of 1933 as it regulates the issuance of corporate securities.

The Securities Act of 1933 was the first major piece of securities industry legislation and it regulates the primary market. The primary market consists exclusively of transactions between issuers of securities and investors. In a primary market transaction, the issuer of the securities receives the proceeds from the sale of the securities. The Securities Act of 1933 requires non-exempt issuers (typically corporate issuers) to file a registration state- ment with the Securities Exchange Commission (SEC). The Registration statement formally known as an S-1 is the issuer’s full disclosure document for the Government. The registration statement must contain detailed information relating to the issuer’s operations and financial condition and must include:

  • A balance sheet dated within 90 days of the filing of the registration statement.
  • Profit and loss statements for the last 3 years
  • Company’s capitalization
  • Use of proceeds
  • Shareholders owning more than 10% of the company’s securities
  • Biographical information on the Officers and Directors

The registration statement will be under review by the SEC for a minimum of 20 days. During this time, known as the “cooling off” period, no sales of securities may take place. If the SEC requires additional information regarding the offering, the SEC may issue a deficiency letter or a stop order that will extend the cooling off period beyond the original 20 days. The cooling off period will continue until the SEC has received all of the information it had requested. A Registered Representative may only begin to discuss the potential offering with customers after the filing date.

The Prospectus
comments powered by Disqus
Related Articles
  1. Breaking Down Financial Securities Licenses
    Professionals

    Breaking Down Financial Securities Licenses

  2. Sell-Side Analysts Need Series 86/87 ...
    Professionals

    Sell-Side Analysts Need Series 86/87 ...

  3. Succeeding At The Series 63 Exam
    Professionals

    Succeeding At The Series 63 Exam

  4. Becoming A Registered Investment Advisor
    Professionals

    Becoming A Registered Investment Advisor

  5. Municipal Bond Tips For The Series 7 ...
    Insurance

    Municipal Bond Tips For The Series 7 ...

Trading Center