Glossary

SEC Schedule 13D

What is SEC Schedule 13D?

SEC Schedule 13D must be filed when an entity acquires more than 5% of any class of publicly traded securities in a public company. In accordance to Rule 13D, this particular SEC filing of an initial beneficial ownership must be submitted within 10 days of the transaction. Schedule 13D is intended to increase transparency around who the large shareholders are in a public company and why they have a stake in it. When a Schedule 13D is filed, it may disclose to the public that a hostile takeover, proxy battle or other “change of control” may soon take place. Schedule 13D is made up of seven sections ranging from basic information on the security type and class, as well as the contact information for the owner, to exhibits such as letters to management signaling a hostile takeover. Schedule 13D, which is often submitted with a tender offer, must be filed electronically via the SEC’s EDGAR computer system for the receipt, acceptance, review and dissemination of documents submitted in electronic format to the Commission. For support and additional information, explore the our solutions here.  

SEC Schedule 13G

What is SEC Schedule 13G?

SEC Schedule 13G, a simpler, short-form version of Schedule 13D, can be used to disclose the beneficial ownership of a company in lieu of Schedule 13D as long as certain conditions are met by three categories of owners: a qualified institutional investor in accordance with Rule 12d-1(b), a passive investor based on Rule 13d01(c), and an exempt investor laid out in Rule 13d-1(d).

Qualified institutional investors must file Schedule 13G within 45 days of the end of the calendar year in which they acquired more than 5% of a company. If they acquired more than 10%, then they must file within 10 days of the end of the calendar month in which the acquisition was made. Qualified investors are only eligible if they acquired the securities in the ordinary course of business, without changing or intending to exert control over the issuer. And they must be a regulated entity such as a registered investment adviser or company.

Passive investors must file Schedule 13G within 10 days of a transaction that amounts to more than 5% but less than 20% ownership of a company. They are also only eligible if they do not change or influence control of the issuer.

Meanwhile, exempt investors should file Schedule 13G within 45 days of the end of the calendar year in which they acquired more than 5% of a company. One type of exempt investor is an entity that’s acquired beneficial ownership of over 5% of a class of equity securities that weren’t registered when the acquisition took place but were registered subsequently.

Schedule 13G must be filed electronically via the EDGAR computer system for the receipt, acceptance, review and dissemination of documents submitted in electronic format to the SEC. For support and additional information, explore our SEC reporting solutions.

SEC Section 16

What is SEC Section 16 (Forms 3, 4, 5)?

SEC Section 16 of The Securities Exchange Act of 1934 requires corporate insiders to publicly disclose their company affiliations, material changes in their holdings or unreported insider transactions through various regulatory filings with the SEC. Specifically, Section 16 mandates that Forms 3, 4 and 5 be filed by insiders—in other words, company investors who are directly or indirectly beneficial owners of more than 10% of stock in a company or directors and officers of the issuer of the securities. An insider of a first-time securities issuer or a new insider at an already-registered securities issuer must carry out the initial filing, Form 3. Form 4 is used to report material changes in insiders’ holdings. Form 5 reports any transactions that should have been included on a previous Form 4 or were eligible for deferred reporting such as gifts of shares or multiple small transactions. Section 16 reporting must be submitted electronically through the EDGAR computer system for the receipt, acceptance, review and dissemination of documents submitted in electronic format to the Commission. The SEC also requires companies to post the forms on their websites by the end of the next business day after filing them. Section 16 reporting deadlines were accelerated due to provisions of the SOX, the Sarbanes-Oxley Act of 2002. For support and additional information, explore our solutions here.

SEC Section 16 (Forms 3, 4, 5)

What is SEC Section 16 (Forms 3, 4, 5)?

SEC Section 16 of The Securities Exchange Act of 1934 requires corporate insiders to publicly disclose their company affiliations, material changes in their holdings or unreported insider transactions through various regulatory filings with the SEC. Specifically, Section 16 mandates that Forms 3, 4 and 5 be filed by insiders—in other words, company investors who are directly or indirectly beneficial owners of more than 10% of stock in a company or directors and officers of the issuer of the securities. An insider of a first-time securities issuer or a new insider at an already-registered securities issuer must carry out the initial filing, Form 3. Form 4 is used to report material changes in insiders’ holdings. Form 5 reports any transactions that should have been included on a previous Form 4 or were eligible for deferred reporting such as gifts of shares or multiple small transactions. Section 16 reporting must be submitted electronically through the EDGAR computer system for the receipt, acceptance, review and dissemination of documents submitted in electronic format to the Commission. The SEC also requires companies to post the forms on their websites by the end of the next business day after filing them. Section 16 reporting deadlines were accelerated due to provisions of the SOX, the Sarbanes-Oxley Act of 2002. For support and additional information, explore our solutions here.

Secondary Offering

What is a secondary offering?

A secondary offering is the sale of stock from an already public company. The most common secondary offering is stockholders selling off all or a portion of their holdings.

The ownership of the stock changes in this scenario. The proceeds of the sale go to the seller. There is little impact on other stockholders or the company whose stock has been sold. For support and additional information, explore our Capital Markets Transactions solutions. 

Section 508 Compliance

What is Section 508 Compliance? 

As part of the U.S. Rehabilitation Act, Section 508 outlines responsibilities for access to people with disabilities. According to Section 508 guidelines, federal agencies and their contractors are required to make public documents accessible to people with physical, sensory or cognitive disabilities. This includes companies that provide goods and services to federal agencies and contractors, including healthcare providers and software companies. Overlooking this requirement has serious consequences for companies that work with federal agencies or contractors. Health plans that fail to include accessible documentation may be found non-compliant under U.S. law, incurring penalties for the responsible companies. As a result, Section 508 compliance has emerged as a primary concern in preparation of PDF documentation intended for public release. For support, explore our ADA solutions.

Securities Act of 1933

What is the Securities Act of 1933?

The Securities Act of 1933 is commonly referred to as the ’33 Act or the Truth in Securities law. It was the first major federal legislation enacted to regulate the securities markets. In response to the Wall Street Crash of 1929, new measures were put into place. This was to ensure better transparency in financial statements so investors could make informed decisions. It also protected them from fraudulent activity and deceit in the securities market.

Before the ’33 Act, the regulation of securities was handled by the states. This led to a lack of consistency in how securities were issued and disclosed. Furthermore, enforcement was also inconsistent.

The ’33 Act required companies to register with the SEC. They also had to provide potential investors with standard documentation, including a prospectus. This prospectus included certified financial statements, information about management, business plans, and a description of the securities being offered. For a company to go public, its shares must be traded on an exchange. The Securities and Exchange Commission (SEC) must declare the company’s submission “effective” for this to happen.

The ’33 Act set out regulations to protect investors. These included uniform rules for public company reporting and disclosure requirements. This was to help prevent fraudulent activities or misrepresentation. Additionally, it established oversight at the federal and state level.

President Franklin D. Roosevelt signed the Securities Act of 1933 into law as part of the New Deal. This happened during the Great Depression. The 1920s saw a meteoric rise in the stock market. On Black Thursday, Oct. 24, 1929, the stock market crashed, losing 11% of its value. This crash marked the beginning of a cataclysmic event.

Then came Black Monday, October 28, 1929, when the stock market fell 13% in a single day. The following day, the market dropped 12%. This downturn continued until mid-November, when the market had lost nearly half of its value. It took 15 years for the market to reach pre-crash levels again.

The fall caused fear among potential investors and consumers, who worried about their financial future. This fear led them to refrain from spending, making the economic situation worse and causing more contractions.

The United States didn’t fully emerge from the Stock Market Crash of 1929 and the ensuing Great Depression until World War II which required men and machinery to fuel the effort. The Stock Market Crash that permeated America for more than a decade was attributed to a speculative boom that went uncontested. With the ’33 Act, capital markets regulation was in the hands of the Federal Government.

Standards including the creation and submission of registration statements that include a prospectus containing detailed financial information on the securities offered, company and business.

All those signing the registration statement, including the company’s senior management and underwriter, must conduct thorough due diligence to verify that the document is complete and accurate.

Registration statements and their accompanying prospectuses must be filed via the SEC’s EDGAR (computer system for the receipt, acceptance, review and dissemination of documents submitted in electronic format to the Commission. These registration statements are examined by the SEC to ensure that they are compliant with disclosure requirements and that the American public and investors can make informed decisions about their investment decisions.

For support and additional information, explore our Capital Markets Transactions solutions.

Securities Act of 1940

What is the Securities Act of 1940?

The Securities Act of 1940 is a law passed by Congress and administered by the SEC to regulate and prevent fraudulent conduct by money managers, investment consultants and financial planners. These various investment advisers are required to operate against a code of conduct set forth under the Act to ensure that all conflicts of interest between them and their clients are eliminated. The Act subjects advisers to five kinds of requirements: fiduciary duties to clients; substantive prohibitions and requirements; contractual requirements; record-keeping requirements; and oversight and inspection by the SEC.

Amendments to the Act require investment advisers with more than $25 million under management to register with the SEC. The Act also delineates investment advisers’ liability while giving structure around what fees and commissions advisers can collect from their clients.

The Stock Market Crash of 1929, which precipitated the Great Depression, was the impetus for the creation of the Securities Act of 1940. More specifically, the SEC published a report on investment trusts and investment companies in 1935 that warned against giving certain investment advisers free reign. The report recommended they be monitored and regulated to guard against the dispensing of advice that favors, whether consciously or not, the advisers’ own financial interests.

Investment advisers must file Form ADV electronically with the SEC via IARD (the Investment Adviser Registration Depository) and state securities authorities on an annual basis. On Part 1 of this form, investment advisers are required to include their educational background, experience, exact type of business they’re engaged in, assets, information on clients, history of a legal and/or criminal nature, and type of investment advice they offer. Part 2 of Form ADV comprises the narrative brochure that advisers must share with their clients. When filed, Form ADV is made available to the public on the SEC’s Investment Adviser Public Disclosure website. For support and additional information, explore our investment company compliance solutions.

Securities and Exchange Commission (SEC) Filing Agent

What is a Securities and Exchange Commission (SEC) filing agent?

A Securities and Exchange Commission (SEC) filing agent is an entity hired to prepare, file, print and distribute periodic and interim disclosure reports, including proxy statements. Public companies work with an SEC filing agent to produce the proxy statement, execute the filing to the SEC and distribute the proxy materials to shareholders. For support and additional information, explore our Annual Meeting and Proxy Solutions.

Securities Exchange Act of 1934

What is the Securities Exchange Act of 1934?

The Securities Exchange Act of 1934 created the U.S. Securities and Exchange Commission (SEC) and authorized it to govern the secondary market trading of company securities in the U.S. Secondary trading is the buying or selling of company securities (stock) typically through brokers or dealers. Often shortened to the Exchange Act of 1934 or the ‘34 Act, this landmark legislation laid the foundation for the financial regulation of public companies listed on stock markets including the New York Stock Exchange, American Stock Exchange and Pacific Stock Exchange.

President Franklin D. Roosevelt first signed the Securities Act of 1933 and the subsequent Securities Exchange Act of 1934 into law in the aftermath of the Stock Market Crash of 1929. The Securities Exchange Act of 1934 gives the SEC broad powers to enforce U.S. federal securities law, but also investigate potential violations such as insider trading, the sale of unregistered stocks, manipulation of market prices and disclosure of fraudulent financial information. The SEC’s consumer protection powers extend to the organizations and individuals participating in the securities markets which would include securities exchanges, brokers and dealers, investment advisors and investment funds. By law, and with SEC oversight, consumers and investors have access to public company registration statements, periodic reports among other securities forms through the EDGAR computer system for the receipt, acceptance, review and dissemination of documents submitted in electronic format to the SEC.

If a company has more than 500 shareholders and more than $10 million in assets, the Securities Exchange Act of 1934 requires that it file annual company information with the SEC using SEC Form 10-K as well as quarterly with SEC Form 10-Q. If a company experiences a material event such as a change in leadership or structure, the SEC mandates the filing of SEC Form 8-K to disclose these changes. Forms 10-K, 10-Q, and 8-K must be filed via the SEC’s EDGAR online system. These periodic reports and annual statements are examined by the SEC to ensure that they are compliant with disclosure requirements and that the American public and investors can make informed decisions about their investment decisions.

The Securities Exchange Act of 1934 also sets forth disclosure requirements in materials used to solicit shareholder votes in annual meetings held for approval of corporate action. The information is captured in proxy materials that must be filed with the SEC in advance of any solicitation. The SEC is charged with ensuring the company has provided all proper and accurate disclosures.

The Securities Exchange Act of 1934 requires disclosure of important information by anyone seeking to acquire more than 5 percent of a company’s securities by direct purchase or tender offer as such an offer could impact control of the public company.

The SEC is limited to seeking civil penalties such as fines and injunctions, barring a person from future roles such as a corporate officer. Depending on the severity or significance of the offense, the Department of Justice can file criminal charges for alleged violations of the Securities Exchange Act of 1934. The largest SEC fine to date was levied on JP Morgan Chase for the selling of mortgage securities by illegal means, leading to the 2012 financial crisis. For support and additional information, explore our SEC reporting solutions.