6 issues make you control your Credit Score like a toy

It is known that the higher your Credit Score, the more financial freedom it will give you. Many people fall the trap of credit cards without feeling, till that they find themselves in a serious financial predicament
I'll show you here 6 elements that are the main control in raising or lowering your Credit Score, so if you know how to control it, you can reach a strong credit level of up to 7.5 points in one year. Which will allow you to get whatever you want "new home, car or cover education expenses".

1. Credit Used
Credit Used is Very High Impact on Credit Score, If you use too much of your available credit, you may not have enough credit when you need it. To lenders, this could be a sign that you may be overextended.
Use less than 30% of your available credit is a good goal. But, keep in mind that using some available credit and paying it off monthly may be better than not using any credit at all.
Lenders see the good AVERAGE of using the credit money is 31% - 60%, but they prefer 11% - 30% of using the credit money.

2. On-Time Payments 
Your Credit card Payments On Time is High Impact on your Credit Score.
Because a history of on-time payments helps show lenders that you can manage credit responsibly. a payment that's late 30 days or more is often reported to the credit bureaus.
Set up auto-pay so you never miss a payment, or bill pay reminders to receive notifications when your bills are due.  62% of people only keep their Credit card Payments On Time.
If you keep your Credit card Payments On Time that mean your Credit score is above 6 and below 6.5.

3. Oldest Credit Line
Age of Your Oldest Account Moderate Impact on your Credit Score. 
The age of your oldest credit account shows lenders how much experience you have handling credit.
Lenders see the good AVERAGE of  Credit Line is 3 - 7 Yrs, and they see that Credit Line is so good if it between 8 - 24 Yrs oldest than 25 years is EXCELLENT Credit Line.
Keep your oldest credit account open and in good standing. This can help build a positive credit history.

4. Recent Inquiries
Recent Inquiries is Low Impact on  on your Credit Score but it is important, simply it mean " how many and how much loan you take in the past 2 years.
As a rule if you take more Loans or mortgage in the past 2 year that will decrease your Credit score. Having a few inquiries in a year is normal. But people with too many inquiries within a short period could be seen as applying for multiple new credit lines, which is an indicator that someone could be financially overextended.
This rule is applicable on all loans and mortgage, but not on new credit card. yes this is a surprise, if you want to improve your Credit score, open another Credit card account, the secret hear is the Lender (bank) will check your availability to open a new credit card, and if you have at least 6 point with your old Credit card, you will be acceptable to get another Credit card account, and once the new account opened you will gain 0.5 to 1 point over your scour.
But what if the Lender (bank) disapprove my new inquiry to open Credit card??
it is so easy just till your account manger or the banker that you want to open Deposit Credit card account with minimum amount.
So apply for credit only when you need it. If you're shopping around for credit accounts like a mortgage or an auto loan, try to keep your inquiries within a short time period. The Vantage Score 3.0 model counts all inquiries that appear in your credit file within a 14-day window as a single inquiry. and Don't Inquiries in the Past 2 Years over than 1 or 2.

5. New Accounts 
Open New account is Low Impact on your Credit Score.
If you open too many accounts in a short window of time, lenders might wonder if you're overextended financially. also if you didn't open a new account or increase your old accounts limit  for long time lenders might wonder if you're financially Faltering.
Only apply for credit when you need it. And once you open an account, make sure to manage it responsibly by paying your bill on time each month and only using as much credit as you need.
That will be excellent to open a New accounts or increase your limit once every 2 year.

6. Available Credit
Total Available Credit is Low Impact on your Credit Score.
If you don't have enough available credit, a lender might see this as a sign that you're stretched too thin financially and might not be able to pay them back.
That make us remember what we say about Credit Used, Using less than 30% of your available credit is a good goal. But, keep in mind that using some available credit and paying it off monthly may be better than not using any credit at all.
As you note the Credit Used is Very High Impact on Credit Score but Available Credit not so much that impact, that make sense that the Lender improve you to increase your Credit limit.
The Lenders prefer to see between $15K to $50K in your credit but that not Impact so on your Credit Score.

Regulatory Requirements of Broker-Dealers

FINRA member broker-dealers must have principals, also known as supervisors. For most firms, one of these principals must be registered as a Series 27 - Financial and Operations Principal (FINOP). A "FINOP" principal can supervise the following activities:

•    Back office operations
•    Preparation and maintenance of a member firm's books and records.
•    Compliance with financial responsibility rules that apply to self-clearing broker-dealers and market makers.

A principal with a Series 27 registration is responsible for filing regular FOCUS (Financial and Operational Combined Uniform Single) reports. FOCUS reports show items including amounts the firm owes to customers and other parties, as well as amounts owed to the firm. Securities borrowed for short sales, and securities that were failed to receive are also indicated. Also, the current values of securities owned by the firm are listed.

The SEC establishes broker-dealer net capital requirements under the Securities Exchange Act of 1934 and the rules issued under the Act. Whether a firm has a customer who is slow to pay when buying or slow to deliver when selling, the firm's own capital may be required to settle the transaction.

Member firms who underwrite securities frequently perform firm commitment underwriting in which they promise to buy shares that investors do not subscribe to. Not to mention that broker dealers are businesses that have all the typical general operating expenses that other professional service firms do.

FINRA-member broker-dealers are required to provide, on request, information about its financial condition to its customers. As the rules state:

[(a) A member shall make available to inspection by any bone-fide regular customer upon request, the information relative to such member's financial condition as disclosed in its most recent balance sheet prepared either in accordance with such member's usual practice or as required by any state or federal securities laws, or any rule or regulation thereunder.
(b) As used in paragraph (a) of this Rule, the term "customer" means any person who in the regular course of such member's business, has cash or securities in the possession of such member.]


Broker-dealers becoming insolvent can have a significant negative impact on the markets, so the SEC requires broker-dealers to constantly monitor and report their financial condition. What's critically important here is the liquid net worth of the firm.

Like any business, broker-dealers have assets that can be readily sold and those that can't. Therefore, when calculating their net capital, member firms exclude their illiquid assets. These assets that are not easily sold for their full value are also called non-allowable assets for purposes of calculating net capital. Illiquid or "non-allowable" assets include equity in real estate, exchange memberships, furniture and fixtures, and intangible assets such as goodwill or prepaid expenses. Notice that while these assets have value, the value is either too hard to determine or would involve selling, say, $5,000 worth of office furniture for a few hundred dollars.

The firm also owns securities. While securities do have a discernible market value, that value is often volatile. Some securities trade so infrequently that determining any market value can be difficult. So, if the regulators don't want broker-dealers counting intangible assets, it's not surprising they also don't want member firms counting their securities at 100% of today's market value.

Rather, the typical reduction in value called taking a haircut for common stock is 15 %. If the stock trades in a limited trading market, the haircut/reduction in value is 40%. And, if the security has no ready market, the regulators require broker-dealers to treat them as worthless a 100% haircut is taken.

The regulators even require an extra haircut if a security would make up too much of a firm's net capital, called an undue concentration. If a non-exempt security's value is more than 10% of the firm's tentative net capital, the firm must take an additional haircut at the same rate by which the position exceeds the 10 % threshold on the security's value.

And, if a customer has a fail to deliver after selling stock, the firm must set up a fail to deliver account on its books in the amount of the sales proceeds for the trans¬action. Believe it or not, at this point the position is still an allowable asset.

However, the longer the fail-to-deliver drags on, the bigger the required haircut. On the fifth business day following settlement the fail-to-deliver must be aged for purposes of computing net capital. The position would now be marked to the market with a 15% haircut taken on that. Even though the asset has been aged, it is still an allow¬able asset. It just needs to get itself an extra-short haircut to be counted in the firm's net capital.

Types of Broker-Dealer Businesses in Secutiries Markets

An introducing broker-dealer has a relationship with customers in which it makes recommendations to customers on how and what to trade, but let’s another firm handle the execution of the trades.

A firm that executes transactions for an introducing broker-dealer is sometimes called an executing broker-dealer. The introducing and executing broker-dealers split commissions/fees according to a written agreement.


An introducing broker-dealer more typically contracts with a carrying broker-dealer. The carrying broker-dealer acts as the introducing broker-dealers back office, handling customer assets and clearing transactions through a clearing broker-dealer.

FINRA requires the firms to execute a contract between the carrying firm and the introducing firm stipulating the terms of the agreement for the carrying firm to hold customer assets and execute trades on behalf of the introducing firm. Or, an introducing broker-dealer may work with a clearing or self-clearing broker-dealer directly.

The clearing broker-dealer also performs back-office functions for the introducing broker-dealer. As the name implies, they are members of the clearing agencies and clear trades for themselves and other firms.

A clearing member firm is a broker-dealer that also provides many functions of a retail bank. They hold customer assets, and receive dividends, interest payments, and deposits from customers. One of the main sources of revenue and profit for such firms is the interest they earn on customer cash versus the small rates paid to customers.

As you can imagine, clearing members have stricter financial requirements than broker-dealers who avoid handling customer assets.

We looked at clearing facilities/agencies, including the National Securities Clearing Corporation, and the related Depository Trust Company.

Clearing member firms are members of a clearing agency as well as various exchanges and other SROs. If a broker-dealer is not a clearing member, it must have an arrangement with a clearing member firm to clear and settle its trades. An introducing broker-dealer typically pays a clearing member a fee per-trade. Also, if the clearing member extends any margin loans to customers, the introducing broker-dealer pays interest on such loans.

The term prime brokerage refers to bundled services that clearing firms offer to active traders, such as hedge funds. Hedge funds require more leverage than a retail customer and the ability to borrow securities for short sales. A clearing prime broker, a full-service broker-dealer, provides such specialized services for highly capitalized, actively traded accounts.

the most important facts you must to know about Depositories and Clearing Facilities

If a customer buys 500 shares of SBUX, his broker-dealer finds a market maker who wants to sell 500 shares right now at their offer price. Such trades settle "T + 2" or two business days from the trade date. But, what does that part—the next two business days involve, if the trade is already completed?

When he buys those 500 shares of SBUX, let's say at $30 a share, his account will show the 500 shares among his positions and will debit the $15,000 plus a commission for the purchase. But, those are just numbers on a screen at this point. Until the transaction is cleared and settled, nothing is completed. The firms that clear transactions in securities are known as clearing agencies or clearing facilities.

Clearing Agencies are self-regulatory organizations that are required to register with the Commission. There are two types of clearing agencies -- clearing corporations and depositories.

Clearing corporations include: The National Securities Clearing Corporation, the Fixed Income Clearing Corporation, and the Options Clearing Corporation (OCC).

The only depository is the Depository Trust Company or DTC.

Clearing corporations compare member transactions (or report to members the results of exchange comparison operations), clear those trades and prepare instructions for automated settlement of those trades, and often act as intermediaries in making those settlements.

Depositories hold securities certificates in bulk form for their participants and maintain ownership records of the securities on their own books. Physical securities are maintained in vaults, and ownership records are maintained on the books of the depository.

Clearing corporations generally instruct depositories to make securities deliveries that result from settlement of securities transactions. In addition, depositories receive instructions from participants to move securities from one participant's account to another participant's account, either for free or in exchange for a payment of money."

How is Crowdfunding firms work?

Even though we just looked at concerns for non-accredited purchasers in Reg D private placements, anyone can invest in a "crowdfunding" securities offering. Because of the risks involved with this type of investing, however, investors are limited in how much they can invest during any 12-month period.

The limitation depends on net worth and annual income. If either the investor's annual income or net worth is less than $100,000, then during any 12-month period, he can invest up to the greater of either $2,000 or 5% of the lesser of his annual in¬come or net worth.

If both his annual income and net worth are equal to or more than $100,000, then during any 12-month period, an investor can commit up to 10% of annual income or net worth, whichever is less, but not to exceed $100,000.

As when determining who is and is not an accredited investor, the value of the investor's primary residence is not included in the net worth calculation. In addition, any mortgage or other loan on a primary residence does not count as a liability up to the fair market value of the home.

Companies may not offer crowdfunding investments to investors directly. Rather, they must use a broker-dealer or funding portal registered with the SEC and a member of the Financial Industry Regulatory Authority (FINRA).

Investors open an account with the crowdfunding intermediary to make an investment, and all written communications relating to the crowdfunding investment will be electronic.

Before an investor can make a crowdfunding investment the broker-dealer or funding portal operating the crowdfunding platform must ensure that he reviews educational materials about this type of investing. In addition, the investor must positively affirm that he understands he can lose the investment, and that he can bear such a financial loss.

Investors also must demonstrate they understand the risks of crowdfunded investing. The sharing of views by the crowd is considered by some to be an integral part of crowdfunding. Broker-dealers and funding portals, through their crowdfunding plat¬forms, are required to have communication channels transparent to the public. For example, on an online forum relating to each investment opportunity.

In these channels, the crowd of investors can weigh in on the pros and cons of an opportunity and ask the company questions. All persons representing the company must identify themselves.

Investors have up to 48 hours prior to the end of the offer period to change their mind and cancel their investment commitment for any reason. Once the offering period is within 48 hours of ending it is too late to pull out. However, if the com¬pany makes a material change to the offering terms or other information disclosed to investors, investors are given five business days to reconfirm the investment commitment.

Investors are limited in their ability to resell their investment for the first year and may need to hold for an indefinite period.

Unlike investing in companies listed on a stock exchange where investors can quickly and easily trade securities on a market, crowdfunding is similar to holding a direct participation program interest. To sell the investment an interested buyer must be located.


Transactions & Exempt Transactions

So, commercial paper, T-Notes, and municipal bonds are exempt securities. They are good to go without any paperwork being filed with the SEC. There are also transactions that qualify for exemptions, called exempt transactions.

Unlike an exempt security, an exempt transaction must be claimed by the issuer with some paperwork to back up what they did or are about to do. Under Regulation A, for example, an issuer can sell up to $5,000,000 worth of securities in a year without having to jump through all the usual hoops. Rather than filing a standard registration statement, the issuer files an offering circular, a much more scaled-down document.

The SEC oversees interstate commerce, meaning commerce among many states. Therefore, if the issuer wants to sell only to residents of one state, the SEC doesn't get involved. There is already a state securities regulator who can deal with this one. Therefore, intrastate offerings are exempt if they match this statement, "Any security which is a part of an issue offered and sold only to persons resident within a single State or Territory, where the issuer of such security is a person resident and doing business within or, if a corporation, incorporated by and doing business within, such State or Territory."

These offerings are registered with the securities regulator of that state or territory rather than the federal government. The state where the offering takes place is where the issuer is located and doing business. The issuer doesn't just pick a state at random in which to offer the securities.

These intrastate offerings are performed under an exemption to the Securities Act of 1933 called Rule 147. As the rule states, the offering is not required to be registered with the SEC provided "That the issuer be a resident of and doing business within the state or territory in which all offers and sales are made; and that no part of the issue be offered or sold to non-residents within the period of time specified in the rule." So, if the issuer's business is in the state, 80% of its gross revenue is derived there, 80% of its assets are located there, and 80% of the net proceeds will be used in that state, a Rule 147 exemption can be claimed to avoid registration with the SEC. But, as the second requirement clarified, the buyers can't sell the security to a non-resident for a time specified by the rule which is nine months.

To be an eligible investor, the individual must be a resident of the state, or a partnership, LLC, corporation, trust or other entity that has its principal office within the state. And, if an entity is formed to acquire part of the offering, it would only be eligible if all beneficial owners of the organization are residents of the state or territory (e.g. Puerto Rico).

The SEC is out to protect the average investor from fast-talking stock operators. But, the SEC doesn't provide as much protection to sophisticated investors such as mutual funds, pension funds, or high-net-worth individuals. If anybody tries to scam these investors, they'll be in just as much trouble as if they scammed an average investor, but the SEC doesn't put up as much protection for the big, institutional investors, who can usually watch out for themselves. Therefore, if the issuer wants to avoid the registration process under the Act of 1933, they can limit the offer and sale of the securities primarily to these accredited investors. Accredited investors include institutions such as:

•    banks
•    broker-dealers
•    insurance companies
•    investment companies
•    small business investment companies (Venture Capital)
•    government retirement plans
•    company retirement plans of a certain minimum size

An accredited investor also includes an executive officer, director, or general partner of the issuer. If Amazon wants to sell shares of Amazon to Jeff Bezos and the members of the board, how much protection do these investors need from the company they run?

Accredited investors also include individuals or married couples with at least $1 million net worth excluding the value of their primary residence. If not relying on net worth, an accredited investor can qualify based on income. Individuals earning at least $200,000 a year in the most recent two years and married couples earning at least $300,000 with a reasonable expectation of making at least that much this year —are also accredited investors.

Exemptions relate to registration requirements. Whether an offer is registered, it is subject to anti-fraud regulations. As Regulation D announces from the start, "Regulation D relates to transactions exempted from the registration requirements of section 5 of the Securities Act of 1933. Such transactions are not exempt from the anti-fraud, civil liability, or other provisions of the federal securities laws. Issuers are reminded of their obligation to provide such further material information, if any, as may be necessary to make the information required under Regulation D, in light of the circumstances under which it is furnished, not misleading."

Under Regulation D an issuer finds various offerings that can be completed without the usual registration requirements having to be met. Let's look at the best-known exempt transactions, performed under either Rule 505 or 506.

A Reg D/private placement transaction is exempt based on the issuer offering to an unlimited number of accredited investors but only to a maximum of 35 non-accredited purchasers. Under Rule 505 the issuer can only offer and sell up to $5 million in a 12-month period. The issuer must inform all investors that they will receive "restricted securities" that cannot be sold until after a 6-month minimum holding period, which we discuss in just a few paragraphs. Also, there can be no general solicitation or advertising in connection with this private placement offering.

Even though the issuer isn't filing a registration statement with the SEC, it still must provide information to the investors. As the rule states, "Rule 505 allows companies to decide what information to give to accredited investors, so long as it does not violate the anti-fraud prohibitions of the federal securities laws. But companies must give non-accredited investors disclosure documents that generally are equivalent to those used in registered offerings. If a company provides information to accredited investors, it must make this information available to non-accredited investors as well. The company must also be available to answer questions by prospective purchasers."

And, even though there is no registration statement required, when the offering is completed, issuers must file a Form D that discloses the basic facts of the offering. For example, by looking up their Form D, we see that Five Guys sold $10 million of stock through a private placement in which they tried to raise $15 million. Beyond that, we see little information, only that Five Guys takes in somewhere between $25 million and $100 million in revenue. If Five Guys does an IPO someday, then we will have access to all pertinent information on the issuer.

If the issuer doesn't want limits placed on the amount of money raised, they utilize Rule 506 instead. Then, they decide if they want to solicit investors and advertise the offering to prospects or not.

Under one type of Rule 506 offering the issuer will offer and sell to up to 35 non-accredited purchasers, but unlike under Rule 505 the issuer must reasonably believe the non-accredited purchasers are either sophisticated or are relying on an independent (from the issuer) purchaser representative who can explain the risks and rewards of the deal. Because the issuer will use non-accredited purchasers here, no solicitation or advertising is allowed.

If the issuer wants to be able to solicit investors, they must limit them to accredited investors only. This is the other type of exempt transaction under Rule 506.

No matter which of these exemptions is used, the issuer must file a Form D - Notice of Exempt Offering of Securities. And, investors receive "restricted shares" subject to mandatory minimum holding periods.

The securities offered and sold through a private placement are not required to be registered, but FINRA requires member firms to file a copy of the private placement memorandum (PPM) with their Firm Gateway. The PPM must be filed no later than 15 calendar days after the first sale is made. Or, if no PPM is going to be used with the offering, that fact must be reported to FINRA.

there is a Exempt Securities from Act of 1933?


The Securities Act of 1933 is a piece of federal legislation, so it's not surprising the federal government is not required to follow it. That's right, government securities are exempt from this act. T-Bills, T-Notes, T-Bonds, STRIPS, and TIPS are not required to be registered.

States, counties, and cities those who issue municipal securities also got an exemption from the registration process under the Securities Act of 1933.

The federal government generally does not exert that much control over any State or local government, and municipal governments are not as likely to go bankrupt as corporations. So, if a school board puts out an issue of municipal securities based on fraudulent financial statements, the SEC could go after them in federal court. But, these municipal securities issuers do not file registration statements with the SEC and wait for the SEC to tell them it is okay to proceed.

Charitable/fraternal/religious/benevolent organization securities are exempt.

Bank securities, which are already regulated by bank regulators (FDIC, FRB, and Comptroller of the Currency).

Securities issued by Small Business Investment Companies (SBICs) are also exempt, since they are only offered and sold to institutions and other sophisticated investors who don't require so much protection.

Short-term debt securities that mature in 270 days or less , commercial paper, bankers' acceptances, other promissory notes are also exempt from this registration process.

If a corporation had to get through the registration process just to borrow money for a few days, weeks, or months, interest rates would likely have moved before the deal could be completed. On the other hand, if they want to borrow money for several years by issuing bonds or sell ownership stakes, the regulators feel maybe they ought to slow down and reveal material facts to investors.

Stabilization ... What is it? andh who is responsible for?

Normally, anyone caught trying to artificially move the price of a security on the secondary market is subject to regulatory problems, civil liability to other traders, and sometimes even criminal penalties.

If a few big traders of some small-company stock get together and come up with a plan to enter large buy orders at certain times throughout the day to boost the price, they are engaging in market manipulation.


On the other hand, right after a new offer of securities, the lead underwriter can prop up the price of the stock on the secondary market to some extent through stabilization.

 If the public offering price or POP is $10, but the stock starts trading on NASDAQ or NYSE for only $9.50, the managing/lead underwriter can place bids to buy the stock to provide a floor price for the investors nice enough to buy the IPO. Now, the bid can't be higher than the POP of $10, and it also can't be higher than the highest independent bid for the stock..

 That means the bid had better be bona-fide and cannot come from a subsidiary of the managing underwriter's firm, for example. If another market maker is quoting $9.50, the man¬aging underwriter can bid $9.50, but not $9.51. And, should the price rise to the public offering price again, no bids above the POP could be placed.

Since this is an unusual situation, stabilizing bids must be identified as stabilizing bids on the NASDAQ trading system. Before the managing underwriter enters any stabilizing bids, the firm must first submit a request to NASDAQ Market Watch to enter one-sided stabilizing bids. It is typically the managing underwriter who enters stabilizing bids, but whether it's that firm or another syndicate member, remember that only one firm can be placing stabilizing bids.

What if there is no independent market maker for the stock? 
Then, no stabilizing bids can be placed. The syndicate also must disclose any plans for stabilization in a legend (box of text) in the offering document that refers to disclosures in the "plan of distribution" section of the prospectus regarding stabilization activities.

what is Types of Offerings differant from common type?

Specific Types of Offerings 

In a registered secondary offering the key word is secondary. As with all secondary or non-issuer transactions, the proceeds are not going to the issuer. Rather, they are going to, for example, a former CEO or board member who is now offering his or her restricted shares to the public. The restricted shares were not registered; now they are being registered and offered to investors on the secondary market. Remember that if the issuing corporation does an additional offer of stock, it is not a secondary offering. Rather, it is a "subsequent primary distribution." When the issuer gets the proceeds, the word is "primary," not "secondary."

A specific type of firm commitment is called a standby underwriting. While a broker-dealer cannot buy IPO shares for its own account just because it wants to, they can act as a standby purchaser for the issuer, buying any shares the public doesn't.

Usually, we associate "standby" with an additional offering of stock, which inherently involves a rights offering.

Shareholders are owners of a certain percent of a company's profits; therefore, if new shares are sold to other people, the % owned by existing shareholders would be decreased or "diluted" if they didn't get first right of refusal on a certain number of shares. That's why issuers performing an additional offering of stock typically do a rights offering that provides existing shareholders the right to buy their % of the new shares.

To ensure that all rights are used/subscribed to, a standby underwriter may be engaged to agree to buy any rights that shareholders don't use and exercise them to buy the rest of the shares being offered.

Some offerings of securities are registered now but will be sold gradually at the current market price. That means if you buy in the first round, you might end up paying more, or less, than the investors who buy shares at the then-current "market price."

What if there is no "market" for the shares being offered in an at the market offering? 
Then, the SEC has a real problem with broker-dealers or their associated persons telling investors they're buying the security "at the market."

If the stock doesn't trade on an exchange, the broker-dealer may not tell the customer the security is being offered to (or purchased from) the customer at the so-called "market price." That would be a "manipulative, deceptive, or other fraudulent device or contrivance," according to the SEC. If the firm is the only firm willing to make a bid / offer on the stock, that, by definition, means there is no actual market for the security.

An issuer might want to register a certain number of securities now but sell them gradually or on demand over the next few years. If so, the issuer can use a shelf registration. For example, if they want to borrow money by issuing bonds, they might want to get them registered now but wait and hope that interest rates will drop over the next few years, at which point they can issue the bonds and borrow the money at more attractive rates in the future, with the offering already on-deck and ready to go. Or, if the company has a dividend reinvestment program (DRIP) in place, or must continuously issue shares when executives and key employees exercise stock options, they are likely to use a shelf registration.

The term "when-issued" is an abbreviation for the longer form of securities that are traded "when, as, and if issued." As the name implies, when-issued refers to a Transaction made conditionally, because a security has not yet been issued only. U.S. Treasury securities sold at auctions new issues of stocks and bonds, and stocks that are offered continuously or over time are all examples of when-issued securities.

Who is underwriters or Investment Banking .. what is playing?

An investment banking firm negotiates the terms of the underwriting deal with the company planning to go public and then acts as the managing underwriter of a group of underwriters collectively known as the underwriting syndicate.

The managing underwriter spells out the basic terms of the underwriting and issues a letter of intent to the issuing corporation in which the risks to and obligations of each side are spelled out. The underwriter relies on a market-out clause, which explains that certain unforeseen events will allow the underwriter to back out of the deal. If the company's drug making facilities are shut down by the FDA due to contamination, for example, the underwriter can back out of the underwriting engagement.
This topic may related to SIE exam.

For municipal securities and for some corporate securities offerings, a potential managing underwriter submits a bid or responds to an RFP (request for proposals). This is known as a competitive bid as opposed to a negotiated underwriting.

In a competitive bid, the syndicate who can raise the money at the lowest cost to the issuer wins.

 In a negotiated underwriting, the managing underwriter negotiates the terms of the deal with the issuer, and then forms a syndicate of underwriters.

Even though firms like Morgan Stanley and Goldman Sachs are fiercely competitive, they also routinely work with each other when underwriting securities. Sometimes Goldman Sachs is the managing underwriter; other times Goldman Sachs is just one of many underwriters in the syndicate. Depends which firm brought the deal to the table.

The syndicate often gives an issuer a firm commitment. This means the underwriters bear the risk of any unsold securities and make up the difference by buying them for their own accounts. That's a last resort, though. The whole point of doing the underwriting is to sell all the securities as fast as possible at the highest price Possible.

Underwriters act as agents for the issuer when they engage in a best efforts, (all-or-none,) or (mini-max) underwriting. Here, if the minimum amount is not raised, the underwriters are off the hook.

In a best-efforts underwriting, the issuer will accept what the underwriters raise. In the other types, money is returned to investors if the minimum amount is not raised during the offering period.

Broker dealers involved in either type of contingency offering (all-or-none, mini-max) must place customer payments in an escrow account so that if the offering is canceled, investors receive their money plus their prorate share of any interest payments. If the underwriter were to place such payments into its own account, this would be a violation of FINRA rules.

The firms in the syndicate usually handle different amounts of an offering, and their liability for any unsold shares is spelled out in an agreement among the underwriters. Not surprisingly, the agreement among underwriters is called the agreement among underwriters, sometimes referred to as the syndicate letter.

Syndicate members in a firm commitment have their firm's capital at risk, meaning they act in a principal capacity. The syndicate manager, therefore, often lines up other broker-dealers to help sell the offering. This group of sellers is referred to as the selling group.

The selling group acts in an agency capacity for the syndicate, trying to sell shares but bearing no financial risk for the ones they can't. They have customers who might want to invest the syndicate is happy to share part of the compensation with these firms.

So, in a firm commitment underwriting the syndicate members have capital at risk, but selling group members never do in any type of underwriting.

❑ Underwriter Compensation
Securities regulators are concerned with protecting investors. Investors can be defrauded when an issuer pulls most of the value out of the company and gives it to the underwriters either in the form of cash or generous warrants to buy shares at fractions-of-a-penny.

Why would an issuer want to do that?
 Maybe they don't want to pay for the services with money and would rather just take it out of the value of the investors' shares by letting the warrants dilute their equity.

Or, maybe the issuer owns a percentage of one of the underwriters. Moving money from this company over to that one would be a neat trick for the issuer, so why not just pay top dollar for the underwriting both in terms of fees and underwriter options/warrants?

Promoters are people who founded the company or have a big ownership interest in it. If the offering doesn't pass the smell test in terms of underwriter or promoter compensation, the regulators will shut it down through legal action.

For a good example of underwriter compensation, we can pull up the prospectus for Facebook's IPO. When we do, we see that the shares were sold to investors at a POP of $38, with the spread to the underwriters at about 42 cents per share.

FINRA insists the terms of the offering among the various underwriters be spelled out clearly:

[Selling syndicate agreements or selling group agreements shall set forth the price at which the securities are to be sold to the public or the formula by which such price can be ascertained, and shall state clearly to whom and under what circumstances concessions, If any, may be allowed.]

How do you know if there is securities offering?

To complete a securities offering, under the Securities Act of 1933, an issuer first registers with the Securities and Exchange Commission (SEC). The SEC is part of the federal government, with the Chairman appointed by the President of the United States.

The SEC wants to see what the issuers will tell their potential investors in the prospectus, which is part of the registration statement. They require the issuers to provide the material or relevant facts on the company: history, competitors, products and services, risks of investing in the company, financials, board of directors, officers, etc. And, they require it to be written clearly. Only if investors understand the risks and rewards of an investment do they have a chance of determining a good opportunity from a bad one.
This topic may related to SIE exam.

The SEC and other securities regulators do not protect investors from making bad choices. Their concern is that the issuer provides enough pertinent information so investors can decide on investing or taking a pass.

If information is misstated or omitted from the offering documents, investors are defrauded. The SEC and state securities regulators are both out to protect investors from fraudulent offers of securities.

The issuer hires underwriters, also called investment bankers, to help them offer securities. The underwriters help the issuer file a registration statement with the SEC. Now, the cooling-off period, which lasts a minimum of 20 days, begins. During this period, no advertising is allowed, and, while indications of interest are taken, no final sales are made until the SEC finally clears the issue.

A registered representative must deliver a preliminary prospectus to anyone giving an indication of interest. This disclosure document contains all material information except the release date and the final public offering price. As amendments are filed to this preliminary prospectus, or "red herring," a range of likely prices for the stock are typically listed.

The SEC reviews the registration statement (part of which becomes the prospectus) for clarity and to make sure that at least the boiler plate disclosures have been made. If a section looks incomplete or unclear, they'll make the issuer/underwriters rewrite it.

But the SEC cannot and does not determine the information is accurate or complete. They don't know the issuer's history, and the financial statements the issuer provides "who knows if they're accurate?" Since the SEC cannot and does not verify information, the issuer and the underwriters hold a due diligence meeting during the cooling-off period, a final meeting or series of meetings to make sure they provided the SEC and the public with accurate and full disclosure.

The issuer can publish one type of advertising during the cooling-off period, called a tombstone. A tombstone lays out the basic facts: the issuer, the type of security, number of shares, amount to be raised, and then the names of the underwriters.

A tombstone is not an offer to sell the securities. As the disclaimer states, "The offer is made only by the Prospectus."
Even though the SEC requires issuers to register their securities offerings, they don't approve or disapprove of the offering or pass judgment on any aspect of the prospectus. They don't guarantee accuracy or adequacy of the information provided by the issuer and its underwriters. And there must be a prominent legend such as:

[Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or passed upon the adequacy or accuracy of this prospectus. Any representation to the contrary is a criminal offense.]

If the issue of stock is authorized for listing on NYSE, NASDAQ, or other major exchanges, the issuer and underwriters only register with the SEC, since the securities are federal covered securities.

But, if the issue will not trade on those exchanges, the stock also must be registered with the states where it will be offered and sold.

What is the defrance between Public companies & Privet companies?


Public companies raise money by issuing stocks and bonds to investors, who can trade the securities with other investors on the secondary market. Examples of public companies include Starbucks, Facebook, and McDonald's. 
This topic may related to SIE exam.

Private companies, on the other hand, are often owned by just one family or a small group of founders and investors. Their securities do not trade on a secondary market. Examples of private companies include The Chicago White Sox, Five Guys, and Koch Brothers.
Accessing the public markets provides a large amount of capital for the issuer. But, going forward, a public company must provide full disclosure of material facts to their investors, the securities regulators, and the public.

That is why many companies stay private. It is easier to run a business without having to disclose all material information, or worrying about liability to investors for failure to properly disclose something that leads to losses on their stocks or bonds.

If a private company goes public, their first offering of common stock is an initial public offering or IPO. In an IPO, a company sells a percentage of ownership to investors, using the proceeds to expand or accomplish other stated goals.

When the issuer receives the proceeds of the offer that is a primary offering or the primary market.

If early shareholders sell their shares to the public, we call that a secondary offering.

Many IPOs involve both the issuing company and the early investors selling shares to the public for the first time. This is known as a combined offering.

Facebook's IPO was a combined offering. According to the final prospectus, the company received approximately $6.7 billion while the early investors received just over $9 billion. Investors paid $38 for the IPO shares, which, as of this writing, trade for $178.30 on the secondary market.

Many IPO investments, however, do not work out for investors. Buying common stock is always risky. Buying an IPO is especially so.
Ways of Corporat finance ... simply

Ways of Corporat finance ... simply


When a person wants to create a project, he needs funding from his own money. The project is called "individual project". When his own resources are insufficient, he resorts to others either to share with him a limited number of people in the form of a "people's company" or by borrowing from a person or a bank.

As the needs of human beings, projects are develop,  and grow in size .they require a large funding to cover the increase in activity . Here, these projects will find it difficult to accumulate funding from a limited number of people. so  shareholding companies are appeared . they divided into equities with equal nominal value, A large number of investors wishing to invest their money, and thus each investor pays a small share of the value of funding for the project and with the increase in the number of investors becomes a large funding required easily accessible.
The shareholding companies have two types .  first closed joint stock companies, in which the number of shareholders is limited and no new shareholders are allowed. The second is a listed shareholding company, which is listed on the stock exchange to facilitate the trading of its shares in the stock market among a large number of shareholders and investors.

When companies need additional financing from non-shareholders, they borrow by means of a bond called "bond". The process of directing the public to finance under the term "financing democracy" in the face of the "finance dictatorship" is called borrowing from banks.

There is a third way to obtain financing in an existing company or institution is to sell one of its assets, which generates a financial flow in the form of income separately from the rest of the assets, and this sale if one party is a regular sale, and if the sale to the masses so that each owns a common share in This asset under a security is securitization.