Research outlines:
Research Outline # 1
Title of Article: What are Unregistered Securities or Stocks?
Author(s): Katie Adams
Publication Year: 2020
Thesis – Any security without a registration statement on file with the Securities and Exchange Commission (SEC) is considered “unregistered.
II. MAIN IDEA: There are multiple types of investors, the most common is called a “qualified investor” and they are allowed to buy and sell unregistered securities
A. You must be a “Qualified” Investor. What is that?
1. Must have a net worth of over a million dollars
2. Must have an annual income in excess of $200,000
B. Qualified investor is also called an “accredited investor”
1. Same exact rules as a qualified investor
2. in each of the prior two years, and reasonably expects the same for the current year or has a net worth over $1 million, either alone or together with a spouse.
III. MAIN IDEA. There are exemptions in the legality of unregistered securities.
A. Privately owned companies
1. They can sell shares of stocks to executives and board members while new shareholders must notify the SEC
2. Raise capital by soliciting investments from individuals outside the company who are considered to be “qualified investors.”
IV. Main Idea: Unregistered Security Scams
A. “Qualified Investors can become victim to scams
1. Advertisement can be called “private offerings” don’t use those terms.
2. The marketplace for unregistered securities has grown, partially because private securities can be sold over the internet and companies can solicit clients via social media. This results in unregistered, private securities being sold to investors who do not meet the SEC’s criteria for “qualified investors.” And according to Kelly, this is damaging the reputation of the financial advice industry.
B. How to Identify Unregistered Offerings Scams (things to avoid)
- Claims oh high return with no risk, unregistered investment portfolios
- “Unactive” or not in good standing in the state, or unsolicited investment offers
Capstone 2020 