Non-Covered Security

AAA

DEFINITION of 'Non-Covered Security'

A proposed SEC designation under which securities offerings that are small and of limited scope would not be covered by Regulation D. The new designation would be created under the Restoring American Financial Stability Act of 2010 proposed by Connecticut Senator Christopher Dodd. The provision is decried by small business advocates who argue that the new designation would make it much more difficult for small firms to obtain early-stage financing from angel investors.

INVESTOPEDIA EXPLAINS 'Non-Covered Security'

Regulation D provides an exemption from complex securities registration requirements. This exemption is frequently used by early-stage firms who raise money from small groups of savvy accredited investors. Under the bill, the SEC would be required to make a determination on whether to designate a class of non-covered securities that would be unable to use Regulation D. The bill outlines that in making such a designation, the SEC should consider the size of the offering, the number of States in which the securities is being offered and the nature of the persons to whom the security is being offered.

RELATED TERMS
  1. Venture Capital

    Money provided by investors to startup firms and small businesses ...
  2. Angel Investor

    An investor who provides financial backing for small startups ...
  3. Accredited Investor

    A term used by the Securities and Exchange Commission (SEC) under ...
  4. Regulation D - Reg D

    A Securities and Exchange Commission (SEC) regulation governing ...
  5. Seed Capital

    The initial capital used to start a business. Seed capital often ...
  6. Series A Financing

    The first round of financing undergone for a new business venture ...
Related Articles
  1. Fundamental Analysis

    Cashing In On The Venture Capital Cycle

    Find out how VC firms make the market go round, and round and round.
  2. Options & Futures

    When Your Business Needs Money: Angel Investors

    If you have a promising business that needs a boost, you may be able to put your faith in these wealthy investors.
  3. Investing Basics

    IPO Lock-Ups Stop Insider Selling

    Ownership plays a key role when companies go public. Find out how.
  4. Entrepreneurship

    Top 9 Venture Capital Interview Questions

    Ace your interview by learning how to break down the most common questions asked.
  5. Personal Finance

    Seek An Adventure In Venture Capital

    Make a career out of chasing down the "next big thing".
  6. Fundamental Analysis

    What are some examples of return on investment capital?

    Read about some basic examples of return on investment capital for publicly traded companies and companies that have a handful of investors.
  7. Fundamental Analysis

    What is the difference between EBIT and operating income?

    Read about some of the subtle differences identified by the SEC between earnings before interest and taxes, or EBIT, and operating income.
  8. Fundamental Analysis

    What kind of financial reporting requirements does GAAP set out?

    Look at some of the major financial reporting requirements set forth by the generally accepted accounting principles and the required financial statements.
  9. Economics

    The Economic Impact of Better US-Cuba Relations

    We examine what the normalization of relations between the US and Cuba will mean for the two countries' economies.
  10. Options & Futures

    When short selling, how long should you hold on to a short?

    Explore the reasons for short selling and the various factors that influence how long an investor may wish to maintain a short position.

You May Also Like

Hot Definitions
  1. Portfolio Turnover

    A measure of how frequently assets within a fund are bought and sold by the managers. Portfolio turnover is calculated by ...
  2. Commercial Paper

    An unsecured, short-term debt instrument issued by a corporation, typically for the financing of accounts receivable, inventories ...
  3. Federal Funds Rate

    The interest rate at which a depository institution lends funds maintained at the Federal Reserve to another depository institution ...
  4. Fixed Asset

    A long-term tangible piece of property that a firm owns and uses in the production of its income and is not expected to be ...
  5. Break-Even Analysis

    An analysis to determine the point at which revenue received equals the costs associated with receiving the revenue. Break-even ...
  6. Key Performance Indicators - KPI

    A set of quantifiable measures that a company or industry uses to gauge or compare performance in terms of meeting their ...
Trading Center