Financial key terms
and definitions
Defined Financial information
and glossary
Please see specific financial
information below
Finance and Trading:
SEC
The Securities and Exchange Commission is the primary
federal regulatory agency for the securities industry. The
SEC is responsible for promoting full disclosure and
protecting investors against fraudulent practices in
securities markets.
Secondary Offering
A registered offering, usually accomplished through the
public sale of previously issued securities held by current
shareholders. The sale proceeds are paid to the selling
shareholder rather than the issuing company and the number
of shares outstanding does not change.
Security
An investment instrument issued by a company, government or
other organization that provides evidence of debt or equity.
Series
The designation given to multiple issues of common or
preferred stock.
Settlement Date
The date when a transaction involving securities must be
settled by paying for securities purchased or by making
delivery of securities sold. Settlement date is usually
three business days after the transaction was executed
(often referred to as T+3).
Share
Certificate representing one unit of equity ownership in a
corporation.
Shareholder
One who owns one or more shares of stock in a company.
Signature Guarantee
An authentication of a signature in the form of a stamp
affixed to the assignment area of a stock certificate (or
stock power). The stamp is affixed by a firm participating
in Medallion program. The institution guaranteeing the
signature assumes certain liabilities in the event of a
fraud.
Small Estate Affidavit
If an estate is too small to be probated under its state’s
guidelines, an individual(s) may request the transfer of
shares using small estate proceedings for that state and the
form used is often called a Small Estate Affidavit. Each
state has different limitations for the size of the
decedent’s assets and the process to collect as a small
estate may vary and in the case of some states requires
court certification.
Spin-Off
A distribution of the outstanding shares of a corporation
that is being allocated to the holders of another
corporation. An event where an independent company is
created from another existing company through a sale or
distribution of new shares.
Stock
An instrument that signifies ownership in a corporation.
Ownership of stock often includes voting rights and the
right to receive dividends when paid. Only a certain type of
company called a corporation issues stock.
Stock Certificate
A document indicating a shareholder’s ownership of a
specific number of shares in a corporation.
Stock Dividend
A dividend paid as additional shares of stock.
Stock Exchange
A formal marketplace where securities are bought and sold.
Stock Option
The right to purchase a specified number of shares of a
particular stock at a fixed price for a specified time
limit.
Stock Power Assignment Form
An instrument that accompanies a transfer request and is
signed by the registered holder of a security and used for
the purpose of transferring title to another person or
entity.
Stock Split
An increase in the number of outstanding shares of company
stock so that each shareholder’s proportionate equity
ownership does not change. Although the shareholder owns
more stock, the shareholder’s proportionate ownership
remains the same because the price per share of stock
adjusts immediately upon the stock split.
Stop
An order placed against a stock certificate or account that
prohibits any processing of the certificate or for the
account. Typically, stop orders are placed on certificates
that are lost or restricted.
Street Name
Securities held in street name are shares that are
registered in the name of a brokerage on behalf of their
customer. A brokerage holds securities in street name for
the convenience of the customer and to facilitate
transactions.
Surety Bond
A bond issued by an independent entity on behalf of a second
party, usually the transfer agent. The surety bond protects
the transfer agent and the company who issued the stock in
the event that a certificate that is represented as being
lost resurfaces and is legally negotiated. When a
certificate is lost/stolen/destroyed and a replacement is
requested, the shareholder must obtain a surety bond from a
surety company before a replacement can be issued. The cost
to the shareholder to obtain a surety bond is generally 2%
of the market value of the lost certificates.
Taxpayer Identification
Number (TIN)
The Social Security Number of an individual or the Employer
Identification Number of a business, fiduciary or other
organization that is assigned by the Federal Government. The
IRS requires that all taxpayer identification numbers be
certified by completing IRS Form W-9. If any taxpayer
identification number is not validly certified, we are
required by the IRS to withhold tax from income and gross
proceeds payments.
Tax Waiver
A requirement that is mandated by specific states that taxes
be paid before a security is transferred from the name of a
decedent. Upon payment of taxes, a tax waiver is issued and
the shares can be registered in the name of the decedent.
Also called an Inheritance Tax Waiver.
Tender Offer
An offer to purchase solicited by an investor or the issuing
company to shareholders of the company to purchase their
shares at a designated price within a specific time frame.
Testate
Having a legally valid will. An individual who dies with a
legally valid will is considered to have died testate.
Trade Date
The date when a purchase or sale of securities occurs.
Transfer
A change in ownership from one party to another.
Transfer Agent
An agent employed by a company to maintain shareholder
records, transfer shares, complete mailings to shareholders,
pay dividends, and complete other corporate actions
involving the company’s shareholders.
Transfer of Death (TOD)
The process of changing the title of a security from one
name to another upon the death of one of the titleholders.
Transferee
The newly registered owner of a stock certificate that has
been validly transferred.
Treasury Shares
Shares that have been issued and subsequently reacquired by
the issuing company. The shares are considered issued, but
not outstanding and are not included when calculating
dividends, earnings per share or for proxy voting.
Trust
A legal arrangement where an individual gives fiduciary
authority of property to another person or institution (the
trustee) for the benefit of the beneficiary.
Trustee
An entity that manages assets for the benefit of another.
Trustor
A person that establishes a trust.
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Financial key
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