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Investor Protection How the SEC Can Help Lori J. Schock, Special Counsel to the Director Office of Investor Education

Investor Protection How the SEC Can Help Lori J. Schock, Special Counsel to the Director Office of Investor Education and Assistance 2005 AAII Baltimore Chapter. The Usual Disclaimer.

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Investor Protection How the SEC Can Help Lori J. Schock, Special Counsel to the Director Office of Investor Education

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  1. Investor Protection How the SEC Can Help Lori J. Schock, Special Counsel to the Director Office of Investor Education and Assistance 2005 AAII Baltimore Chapter

  2. The Usual Disclaimer The Securities and Exchange Commission, as a matter of policy, disclaims responsibility for any private publication or statement by any of its employees. The views expressed in this presentation are those of Ms. Schock and do not necessarily reflect the views of the SEC, its Commissioners, or other members of the SEC’s staff.

  3. Who We Are and What We Do • Created in 1934 following the Stock Market Crash of 1929 • Administer the federal securities laws • Oversee brokerage firms and other investment service providers • Review filings by most public companies

  4. How the SEC Protects Investors • Assure that the securities markets are open, fair, and honest • Require companies to disclose information • Catch wrongdoers and impose punishment ranging from fines to kicking them out of the industry

  5. How the SEC Helps Investors Help Themselves • Show investors how to research investments and the people who sell them • Make information about publicly traded companies available to the public • Answer questions and handle complaints • Provide free educational materials

  6. SEC Web ResourcesWhere can I find… Special collections of information, such as updates on Enron, WorldCom Financial statement filings from EDGAR Fast answers and our glossary Calculators Hot stock recommendations!

  7. Who Must File Reports A company must file reports if: It has 500 or more investors and$10 million or more in assets, or It lists its securities on: American Stock Exchange Boston Stock Exchange Chicago Stock Exchange Cincinnati Stock Exchange International Securities Exchange Nasdaq Stock Market New York Stock Exchange Pacific Exchange Philadelphia Stock Exchange, or 3. Its securities are quoted on the OTCBB

  8. Tips for Searching EDGAR Ticker symbol search for 8800 largest    publicly traded companies To a find a company named for a person (e.g., John Doe Widget Maker, Inc.), search last name first: Doe John For most searches, “Company Search” will do For complex queries, use the “Archives” search

  9. Registration Statements (S-1, SB-1, F-1) Periodic Reports (Form 10-K for annual info, Form 10-Q for quarterly results) Current Reports (Form 8-K) Proxy Statements (known in EDGAR as Form DEF 14A) Sources of Company Info:

  10. Item 9: Change in accountants Item 10: Directors & executive officers Item 11: Executive comp Item 12: Ownership Item 13: Relations & transactions Item 14: Controls & procedures Item 15: Exhibits, schedules, and reports on Form 8-K Signatures & Certifications What You’ll Find in a 10-K: • Item 1: Business • Item 2: Properties • Item 3: Legal proceedings • Item 4: Submission of matters to a vote • Item 5: Market for securities • Item 6: Selected financial data • Item 7: MD&A • Item 7A: Market risk • Item 8: Financial statements

  11. What You’ll Find in an 8-K: • Changes in Control of Registrant; • Acquisition or Disposition of Assets; • Bankruptcy or Receivership; • Changes in Registrant's Certifying Accountant; • Other Events and Regulation FD Disclosure; • Resignations of Registrant's Directors; • Financial Statements and Exhibits; • Change in Fiscal Year; • Regulation FD Disclosure; • Amendments to the Registrant's Code of Ethics, or Waiver of a Provision of the Code of Ethics; • Public Notice of pension fund blackout period; and • Public release of material non-public information regarding results of operations or financial condition for a completed quarterly or annual fiscal period.

  12. Form 3: Insiders must file no later than the effective date of the registration statement, or, if the issuer is already registered, within ten days of becoming an officer, director, or beneficial owner. Form 4: Changes in ownership must be reported within two business days. Limited categories of transactions are not subject to the two-day reporting requirement. Form 5: Insiders use this form to report any transactions that should have been reported earlier on a Form 4 or were eligible for deferred reporting. If a Form must be filed, it is due 45 days after the end of the company's fiscal year. Stock Ownership Forms

  13. Helpful Materials atwww.sec.gov • On-line publications • Calculators • Check out Brokers & Advisers • Complaint Center • “Fast Answers” to securities questions

  14. Ways to Diversify • Use a mix of cash, bonds, and stocks in your portfolio • Investing in mutual funds can provide diversification by company size, by industry sector, and sometimes by both • Be sure you know your time horizons and risk tolerance before investing

  15. Watch Out for Costs • Ask your broker about commissions • Remember, your broker gets a commission whether you buy or sell, and whether you make money or lose money • Be aware of account fees, margin fees, wrap fees, minimum balances, etc. • Use the SEC’s online Mutual Fund Cost Calculator

  16. Research Your Broker! • Find out your broker’s background • Check out your broker with the NASD online at http://www.nasdr.com/2000.asp Call 1-800-289-9999 • Check with the state securities regulators online at www.nasaa.org or give your state’s regulator a call • You owe it to yourself to know with whom you are doing business

  17. Research Your Adviser! • Investment advisers who manage $25 million or more in client assets generally must register with the SEC • Check the SEC’s Investment Adviser Public Disclosure website under “Investment Management” on our website • Advisers with less than $25 million must register with the state securities agency where the principal place of business is

  18. Research Any Investment! • Read everything you can about a company • Check out company filings through the SEC’s website (www.sec.gov) & “EDGAR” • If you don’t understand an investment product, don’t buy it • If it sounds too good to be true, it probably is….

  19. Psst-want a hot stock tip? • www.mcwhortle.com (a very hot IPO opportunity) • www.growthventure.com/parsons (a fabulous prime bank site) • www.growthventure.com/oldglory (a glorious mutual fund) • www.growthventure.com/grdi (a hedge fund you shouldn’t miss)

  20. SEC Contact Information • Website: www.sec.gov • Phone: 1-800-732-0330 • Email: help@sec.gov • Mail: U.S. Securities and Exchange Commission 100 F Street, NE Washington, DC 20549-0213

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