Investing has a unique, individual language. You see it everywhere, from the financial news to newspapers and even in retirement savings plans. We have compiled a guide to help you understand some of the common words and phrases that you may have come across and didn’t completely understand. These basic terms will be helpful to know so you don’t miss something that can help you reach your financial goals.
Whether you are interested in investing or are a current shareholder, it is essential to become familiar with and understand some fundamental investment terminology. Here are a few basic investing terms that are helpful know.
- Blue Sky Laws: These laws are the securities regulations of each state. The term was created by a Kansas Supreme Court Justice around 1900 to protect investors from risky investments that had no more evidence than so many feet of blue sky.
- Bylaws: These are the documents containing the ground rules by which a company operates. Bylaws frequently establish elements such as the manner of conducting the annual shareholder meeting, the procedures and timing of board meetings, and the duties and titles of executive officers.
- Institutional Investor: An organization that buys and sells securities for investment objectives routinely, such as pension funds, mutual funds, and banks, are institutional investors. They are attractive to corporations issuing guarantees because they are typically sophisticated and stable investors whose securities investments can have a significant bearing on the securities’ value.
- Managing Underwriter: Underwriters acting on behalf of a committee of underwriters are managing underwriters. They deal with registrants, organize the securities selling effort, and represent others by providing appropriate stabilization activities of the portions of offered securities.
- Offering Materials: The prospectus and any other publications considered to be part of it are offering materials. The issuer utilizes them to sell securities but must not make irresponsible statements that may become offering materials during the registration period.
- Preliminary Prospects: Circulating a prospectus before the SEC indicates that the related securities registration statement is effective, and is known as a preliminary prospectus. It does not include securities pricing data. After the registration statement and the prospectus have been registered with the SEC but before it becomes active, the issuer may start offering to market its securities and entertain offers to buy, but cannot accept or sell offers. Some state laws prohibit proposals to sell or receive offers to buy until the registration record is effective.
- Quiet Period: Corporations and their underwriters are extremely cautious in making statements about the offering and business before the effective date, which is considered the quiet period. If they do make any statements, they must be firmly grounded in the facts presented in the preliminary prospectus. Any information a company provided after filing a registration statement but before the SEC declares it effective can be considered part of the prospectus.
- Shareholder Agreement: This is a contract between some or all of a corporation’s shareholders. It sets out their mutual obligations and rights. Closely held corporations typically use these agreements, where a limited number of shareholders owe fair dealing duties to each other because of the challenge to sell shares and the relative ease with which shareholders can violate another’s rights.
A comprehensive list of investing terms would be nearly impossible, but if you learn these phrases you can begin to conquer any confusion you may experience in the investing world.
Understanding Industry Jargon
If you have had little or no experience with investments, you may be apprehensive about where to start. It’s always wise to research thoroughly any investment you are considering. Don’t worry if you find it challenging to follow the experts in the financial media right away. The better you study the information you collect, the more comfortable you will be with the funds you select.
The content on our website is only meant to provide general information and is not legal advice. We make our best efforts to make sure the information is accurate, but we cannot guarantee it. Do not rely on the content as legal advice. For assistance with legal problems or for a legal inquiry please contact you attorney.