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. Series A Financing

    The first round of financing undergone for a new business venture ...
  2. Accredited Investor

    A term used by the Securities and Exchange Commission (SEC) under ...
  3. Angel Investor

    An investor who provides financial backing for small startups ...
  4. Venture Capital

    Money provided by investors to startup firms and small businesses ...
  5. Regulation D - Reg D

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

    The initial capital used to start a business. Seed capital often ...
Related Articles
  1. Cashing In On The Venture Capital Cycle
    Fundamental Analysis

    Cashing In On The Venture Capital Cycle

  2. When Your Business Needs Money: Angel ...
    Options & Futures

    When Your Business Needs Money: Angel ...

  3. IPO Lock-Ups Stop Insider Selling
    Investing Basics

    IPO Lock-Ups Stop Insider Selling

  4. Seek An Adventure In Venture Capital
    Personal Finance

    Seek An Adventure In Venture Capital

comments powered by Disqus
Hot Definitions
  1. Debit Spread

    Two options with different market prices that an investor trades on the same underlying security. The higher priced option ...
  2. Odious Debt

    Money borrowed by one country from another country and then misappropriated by national rulers. A nation's debt becomes odious ...
  3. Takeover

    A corporate action where an acquiring company makes a bid for an acquiree. If the target company is publicly traded, the ...
  4. Harvest Strategy

    A strategy in which investment in a particular line of business is reduced or eliminated because the revenue brought in by ...
  5. Stop-Limit Order

    An order placed with a broker that combines the features of stop order with those of a limit order. A stop-limit order will ...
  6. Pareto Principle

    A principle, named after economist Vilfredo Pareto, that specifies an unequal relationship between inputs and outputs. The ...
Trading Center