SAC General Business Evaluation key terms

Federal law requiring that securities offered for sale to the public be registered with the SEC and accompanied by a prospectus, unless a specific exemption applies.

Federal law that created the SEC, regulates secondary market trading, and requires periodic reporting by public companies. It also governs broker-dealers and exchanges.

Self-regulatory organization for broker-dealers in the U.S., enforcing rules on conduct, advertising, and supervision. It is overseen by the SEC but operates independently.

Self-regulatory organization that writes rules for municipal securities dealers and advisers. It does not enforce its rules; enforcement is handled by the SEC and FINRA.

A firm that buys and sells securities for its own account (dealer) or on behalf of customers (broker). It must register with the SEC and be a FINRA member.

A person or firm paid to give advice about securities as part of a regular business. Registration is generally required with the SEC or state regulators.

A legal obligation to act in the best interest of another party, putting the client's interests ahead of one's own. It includes duties of loyalty and care.

SEC rule requiring broker-dealers to act in the best interest of retail customers when recommending securities, without creating a fiduciary duty.

A formal document that describes a security offering and must be provided to investors. It includes details about the issuer, risks, and financial statements.

An individual or entity meeting income or net worth thresholds, allowing participation in certain private offerings exempt from registration.

The requirement that an investment recommendation be reasonable for a customer based on their financial situation, objectives, and risk tolerance.

The process of verifying a client's identity, financial profile, and investment objectives before opening an account and making recommendations.

Laws and procedures designed to prevent criminals from disguising illegal funds as legitimate. Firms must have programs to detect and report suspicious activity.

A confidential report filed by financial institutions with FinCEN when they detect transactions that may involve money laundering or other illegal activity.

A report that financial institutions must file for cash transactions exceeding $10,000 in a single business day, identifying the individuals involved.

An investment company that pools money from many investors to buy a diversified portfolio of securities. Shares are bought and sold at net asset value.

A fund that holds a basket of securities and trades on an exchange like a stock. Its price fluctuates throughout the day based on supply and demand.

The per-share value of a fund, calculated by subtracting liabilities from total assets and dividing by the number of shares outstanding.

An insurance contract whose value fluctuates with the performance of underlying investments. It offers tax deferral and optional living or death benefits.

An insurance contract that guarantees a fixed rate of return on contributions and a fixed payout, often backed by the insurer's general account.

A fee charged for withdrawing money from an annuity or insurance product within a specified period, often declining over time.

An agreement giving the buyer the right, but not the obligation, to buy or sell an underlying asset at a set price before a specified date.

A contract granting the holder the right to buy an underlying security at a specified price within a set time. The seller has the obligation to sell.

A contract granting the holder the right to sell an underlying security at a specified price within a set time. The seller has the obligation to buy.

A private investment partnership that uses pooled funds and often employs leverage, derivatives, and short selling. It is available only to accredited investors.

The sale of securities to a limited number of qualified investors without public registration, often under Regulation D exemptions.

A record containing the details of a securities order, such as the security, quantity, price, and account. It is used to execute and confirm the trade.

An instruction to buy or sell a security immediately at the best available current price. Execution is certain, but the price is not.

An instruction to buy or sell a security at a specified price or better. Execution is not guaranteed, but the price is controlled.

An order that becomes a market order once a specified price is reached. It is used to limit losses or protect profits.

The date on which a securities transaction is finalized and payment is exchanged for the security. For most equities, it is one business day after the trade date.

The standard timeline for settling a securities trade. For corporate securities, it is one business day after the trade date (T+1).

A debt security issued by a state, municipality, or other government entity to raise funds. Interest is often exempt from federal income tax.

A fixed-income security representing a loan to an issuer. The issuer pays interest and repays principal at maturity.

The total return anticipated on a bond if held until it matures, assuming all interest payments are reinvested at the same rate.

An individual retirement account allowing tax-deductible contributions and tax-deferred growth. Withdrawals are taxed as ordinary income after age 59½.

An individual retirement account funded with after-tax dollars. Qualified withdrawals are tax-free, and contributions can be withdrawn anytime without penalty.

The minimum amount that must be withdrawn annually from traditional IRAs and most retirement plans starting at age 73, as required by tax rules.

A person or entity designated to receive assets from an account, trust, or estate upon the owner's death, often avoiding probate.