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Securities Law

Published September 4, 2013 by Mayrbear's Lair

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The most common securities many individuals are familiar with are stocks and bonds. According to Gabaldon and Soderquist (2011) the courts, however, have acknowledged all types of investment schemes, including some that relate to earthworms, chinchillas, and warehouse receipts for Scotch whiskey, which can also involve a security. People that invest in securities learn to become familiar with security laws to avoid violating them. It can also help them determine whether a transaction is a legitimate security based on concepts that are completely foreign like those mentioned here (Gabaldon & Soderquist, 2011). In other words, understanding security laws may help them learn how to profit from them, plus, it can also serve to protect their investments. In addition, regulation allows for fair competition in the marketplace. For example, consider a private California university that wants to issue “shares in learning” certificates; are they required to register the stock they offer with the Securities and Exchange Commission (SEC)?

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Federal laws mandate that securities are registered before they go up for sale. Companies are expected to file the paperwork with the SEC and the Supreme Court determines what securities constitute an investment contract. In order to be considered an investment contract: (a) it must provide an investment opportunity, (b) establish a common enterprise, (c) provide an opportunity to make a profit, and (d) the returns are derived from the management of others. In addition, the registration process must include detailed information on the provisions of the security offered, including the corporation’s properties and business, the company’s management team and their compensation, security holdings and benefits, a certified financial statement by an independent accounting firm, and any pending lawsuits the company may be engaged in. There are, however, exceptions to registering securities before they go up for sale. For instance, the SEC exempts securities that are issued by banks prior to July 27, 1933 or any securities issued by the government. In addition, securities are exempt if they have been issued by nonprofit organizations including religious, charitable, educational, benevolent or fraternal organizations (Seaquist, 2012). Based on this information, the private university in California, therefore, would be considered exempt, and not required to register with the SEC because it falls under the category of a nonprofit educational organization.

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Regulating securities is an extremely complicated matter. Hazen (2009) contends that it is particularly perplexing because of the degree of detail and difficulty in elaborating both federal and state laws. Although originating is a matter of state law, the majority of regulation for securities falls under the jurisdiction of the federal law (Hazen, 2009). In other words, dealing with federal securities regulations is usually a difficult task that requires the consultation of several sources for efficient management because of the complexities involved. With respect to the stocks issued in from the private California university, according to Seaquist (2012) the Securities act of 1933, Rule 504 of Regulation D states that non-public issuers are permitted to sell up to one million dollars of securities in a twelve month period to any buyer. Under Rule 147, regulations also state that securities offered for sale by an organization that conducts 80% of their business in one state, are also exempt from filing (Seaquist, 2012). Given this information, one can conclude that the private university in California would be exempt from filing with proof the institution meets the following criteria: (a) it is a nonprofit educational organization; (b) the amount offered does not exceed the maximum value mandated in Rule 504 of Regulations A and D, and (c) they conduct most of their business in California where their facilities are located and students attend classes. In conclusion, because of the complexities involved with security laws, it is best to check with a legal consultant to determine exemption status.

References:

Gabaldon, T., & Soderquist, L. (2011). Securities Law (4th ed.). New York, NY: Thomson Reuters/Foundation Press.

Hazen, T. (2009). The Law of Securities Regulation (6th ed.). St. Paul, MN: West Publishing.

Seaquist, G. (2012). Business law for managers. San Diego, CA: Bridgepoint Education, Inc.

Consequences of Reform

Published January 28, 2013 by Mayrbear's Lair

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Reforms from movements like the labor, feminist, civil rights and environmental movements, have significant impact on our culture.  The efforts and collective action of movements produced enormous change.  If it were not for the labor movement efforts that began in the early 1900s, worker conditions could still be subject to the atrocities employees faced that included: (a) poor wages, (b) the inequality of salaries due to gender and race, (c) unhealthy work conditions, and (d) grueling long hours; in addition to the forced endangered child labor population of these conditions.

On the other hand, the feminist movement based their grievances on a status change rather than a social one, like the labor movement that progressed out of the civil rights campaign. The feminist movement had a profound impact on women in our country. It introduced a new mold for the female archetype which helped transform the traditional expectations of women that comprised domestic responsibilities, parenting and rules on their femininity. The significant consequences reflect a world that has embraced a new paradigm, one in which the female population can enjoy equal pay, pursuing their passions, decide their own careers, experience political rights, and seek higher education. The independent feminine spirit has emerged, with more women being featured in prominent leadership roles in the global network, political arena, as well as in the corporate arena.

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Reforms following the September 11th terrorist attack have also produced profound effects with colossal impact. Many consequences emerged from that historic tragic event, including the most noteworthy: the manifestation of systems that focus on exposing individuals private lives. Organizations like Homeland Security and the National Counter-terrorism Center, have implemented more systems in intelligence collecting, surveillance, closer cargo inspections, the correlation of information and other activities to target and constrict opportunities for infiltration by plotting terrorists. Other more invasive maneuvers include patting down and stripping young children and wheel chair individuals at various airports and other ports of entry and worldwide.  The human agency, in short, is scrutinized more closely from satellites in space, cameras posted all around our cities, remote-controlled flying cameras; mobile phones; computers and even credit cards (Icke, 2012).

Reforms in the mortgage and loan industry outlined by the Dodd-Frank Financial Reform Act of 2010 (Mortgage Reform, 2012) were constructed to hone in on unsound and deceptive lending practices.  Additionally, it helps people by providing them disclosure forms that educate borrowers on the mortgage and loan process.

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Finally, progressive movements that seek reform in the food industry, are responsible for exposing atrocities inflicted from various farming organizations of the inhumane conditions in which they conduct business. These changes include free range farms that allow animals to live a more abundant natural life rather than those designed by the mass production farm lots of the meat industry where livestock is considered a commodity rather than living sentient beings that bond with their family unit.  These animals traditionally enjoy close relationships.  Free range farms are a colossal improvement from the feedlots concerned with profit and mass production. Some of the poor conditions include: the minuscule size of animal quarters, where each individual animal’s movements (chickens, pigs, cows and calves – which satisfy the needs of the veal industry) are confined and constrained in diminutive cages.  Some farms cut off the tips of the fowls beaks to prevent from pecking and harming each other due to the brutality of their environment.  In addition, research suggests the health and well-being of the human population has been affected from the antibiotics and hormones fed to the livestock. Medical studies reveal there is a link in human diseases such as osteoporosis, miscarriages and birth defects due to the pesticides and chemicals added to the diet of the livestock in these industries, to keep their animals healthy and substantive in size with the intent of producing larger volumes of meat products that yield heftier profits (Robbins, 1987).

This research outlines just a few examples of how reforms can materialize from the passion and energy of movements that continues to shape our world.  When we ponder these changes we must consider what our world may look like down the road as a result of the next generation’s influence and the appetites that guide them.

References:

Mortgage Reform. (2012, July 19). Retrieved from The New York Times Opinion Pages: http://www.nytimes.com/2012/07/20/opinion/mortgage-reform-continued.html?_r=0

Icke, D. (2012). Remember who you are: Remember where you are and where you come from. Isle of Wight, UK: David Icke Books.

Robbins, J. (1987). Diet for a new America. Novato, CA: Stillpoint Publishing.