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Definition of Antifraud Provisions

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Antifraud Provisions

Specific sections and rules of the 1933 Act and 1934 Act that are
designed to reduce fraud and deceit in financial filings made with the SEC. The antifraud provisions
are Section 17(a) of the 1933 Act and Section 10(b) and Rule 10b-5 of the 1934 Act.



Related Terms:

Antidilution Provisions

A clause in a shareholders agreement preventing a company from issuing additional shares, without allowing the current shareholders the opportunity to participate in the offering to avoid dilution of their percentage ownership.


10-K

Annual report required by the SEC each year. Provides a comprehensive overview of a company's state
of business. Must be filed within 90 days after fiscal year end. A 10Q report is filed quarterly.


48-hour rule

The requirement that all pool information, as specified under the PSA Uniform PrActices, in a
TBA transAction be communicated by the seller to the buyer before 3 p.m. EST on the business day 48-hours
prior to the agreed upon trade date.


Acceleration Clause

clause causing repayment of a debt, if specified events occur or are not met.


Act of state doctrine

This doctrine says that a nation is sovereign within its own borders and its domestic
Actions may not be questioned in the courts of another nation.



Active

A market in which there is much trading.


Active portfolio strategy

A strategy that uses available information and forecasting techniques to seek a
better performance than a portfolio that is simply diversified broadly. Related: passive portfolio strategy


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activity

a repetitive Action performed in fulfillment of business functions


activity analysis

the process of detailing the various repetitive Actions that are performed in making a product or
providing a service, classifying them as value-added and
non-value-added, and devising ways of minimizing or eliminating
non-value-added Activities


Activity-based budgeting

A method of budgeting that develops budgets based on expected Activities and cost drivers – see also Activity-based costing.


activity-based budgeting (ABB)

planning approach applying Activity drivers to estimate the levels and costs of Activities necessary to provide the budgeted quantity and
quality of production


Activity-based costing

A method of costing that uses cost pools to accumulate the cost of significant business Activities and then assigns the costs from the cost pools to products or services based on cost drivers.


activity based costing (ABC)

A relatively new method advocated for the
allocation of indirect costs. The key idea is to classify indirect costs,
many of which are fixed in amount for a period of time, into separate
Activities and to develop a measure for each Activity called a cost driver.
The products or other functions in the business that benefit from the
Activity are allocated shares of the total indirect cost for the period based
on their usage as measured by the cost driver.


activity-based costing (ABC)

a process using multiple cost drivers to predict and allocate costs to products and services;
an accounting system collecting financial and operational
data on the basis of the underlying nature and extent
of business Activities; an accounting information and
costing system that identifies the various Activities performed
in an organization, collects costs on the basis of
the underlying nature and extent of those Activities, and
assigns costs to products and services based on consumption
of those Activities by the products and services


Activity-based costing (ABC)

A cost allocation system that compiles costs and assigns
them to Activities based on relevant Activity drivers. The cost of these Activities can
then be charged to products or customers to arrive at a much more relevant allocation
of costs than was previously the case.


activity-based management (ABM)

a discipline that focuses on the Activities incurred during the production/performance process as the way to improve the value received
by a customer and the resulting profit achieved by providing
this value


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activity center

a segment of the production or service
process for which management wants to separately report
the costs of the Activities performed


activity driver

a measure of the demands on Activities and,
thus, the resources consumed by products and services;
often indicates an Activity’s output



Actual cost

The Actual expenditure made to acquire an asset, which includes the supplierinvoiced
expense, plus the costs to deliver and set up the asset.


actual cost system

a valuation method that uses Actual direct
material, direct labor, and overhead charges in determining
the cost of Work in Process Inventory


Actuals

The physical commodity underlying a futures contrAct. Cash commodity, physical.


Actuary

One who uses statistical information to evaluate the probability of future events and prices insurance products.


Additional hedge

A protection against borrower fallout risk in the mortgage pipeline.


Additional paid-in capital

Amounts in excess of the par value or stated value that have been paid by the public to acquire stock in the company; synonymous with capital in excess of par.


Additional paid-in capital

Any payment received from investors for stock that exceeds
the par value of the stock.


additional paid-in capital

Difference between issue price and par value of stock. Also called capital surplus.


ADF (annuity discount factor)

the present value of a finite stream of cash flows for every beginning $1 of cash flow.


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Administrative pricing rules

IRS Rules used to allocate income on export sales to a foreign sales corporation.



Allocation base A measure of activity or volume such as labour

hours, machine hours or volume of production
used to apportion overheads to products and
services.


American shares

SECurities certificates issued in the U.S. by a transfer agent Acting on behalf of the foreign
issuer. The certificates represent claims to foreign equities.


Amortization factor

The pool fActor implied by the scheduled amortization assuming no prepayemts.


Annual percentage rate (APR)

The periodic rate times the number of periods in a year. For example, a 5%
quarterly return has an APR of 20%.


annual percentage rate (APR)

Interest rate that is annualized using simple interest.


Annual percentage yield (APY)

The effective, or true, annual rate of return. The APY is the rate Actually
earned or paid in one year, taking into account the affect of compounding. The APY is calculated by taking
one plus the periodic rate and raising it to the number of periods in a year. For example, a 1% per month rate
has an APY of 12.68% (1.01^12).


Annuity factor

Present value of $1 paid for each of t periods.


annuity factor

Present value of an annuity of $1 per period.


Asset activity ratios

Ratios that measure how effectively the firm is managing its assets.


Asset-Backed Securities

Bond or note SECured by assets of company.


Asset-backed security

A SECurity that is collateralized by loans, leases, receivables, or installment contrActs
on personal property, not real estate.


Asset-specific Risk

The amount of total risk that can be eliminated by diversification by
creating a portfolio. Also known as company-Specific risk or
unsystematic risk.


Attribution Rules

Legislation under which interest, dividends, or capital gains earned on assets you transfer to your spouse will be treated as your own for tax purposes. Interest or dividends relating to property transferred to children under 18 also will be attributed back to you. The exception to this Rule is that capital gains relating to property transferred to children under 18 will not be attributed back to you.


Authorized shares

Number of shares authorized for issuance by a firm's corporate charter.


Authorized shares

The number of shares of stock that the company is legally authorized to sell.


Available-for-Sale Security

A debt or equity SECurity not classified as a held-to-maturity SECurity or a trading SECurity. Can be classified as a current or noncurrent investment depending on the intended holding period.


Avoidable costs

Costs that are identifiable with and able to be influenced by decisions made at the business
unit (e.g. division) level.


Basic IRR rule

Accept the project if IRR is greater than the discount rate; reject the project is lower than the
discount rate.


Bill and Hold Practices

Products that have been sold with an explicit agreement that delivery
will occur at a later, often yet-to-be-determined, date.
Capitalize To report an expenditure or accrual as an asset as opposed to expensing it and charging it against earnings currently.


Blue-chip company

Large and creditworthy company.


Bond agreement

A contrAct for privately placed debt.


Book-entry securities

The Treasury and federal agencies are moving to a book-entry system in which SECurities are not represented by engraved pieces of paper but are maintained in computerized records at the
Fed in the names of member banks, which in turn keep records of the SECurities they own as well as those they
are holding for customers. In the case of other SECurities where a book-entry has developed, engraved
SECurities do exist somewhere in quite a few cases. These SECurities do not move from holder to holder but are
usually kept in a central clearinghouse or by another agent.


Bretton Woods Agreement

An agreement signed by the original United Nations members in 1944 that
established the International Monetary Fund (IMF) and the post-World War II international monetary system
of fixed exchange rates.


Bullet contract

A guaranteed investment contrAct purchased with a single (one-shot) premium. Related:
Window contrAct.


business-value-added activity

an Activity that is necessary for the operation of the business but for which a customer would not want to pay


Buy/Sell Agreement

This is an agreement entered into by the owners of a business to define the conditions under which the interests of each shareholder will be bought and sold. The agreement sets the value of each shareholders interest and stipulates what happens when one of the owners wishes to dispose of his/her interest during his/her lifetime as well as disposal of interest upon death or disability. Life insurance, critical illness coverage and disability insurance are major considerations to help fund this type of agreement.


Cash deficiency agreement

An agreement to invest cash in a project to the extent required to cover any cash
deficiency the project may experience.


cash flow from operating activities, or cash flow from profit

This equals the cash inflow from sales during the period minus the cash
outflow for expenses during the period. Keep in mind that to measure
net income, generally accepted accounting principles require the use of
accrual-basis accounting. Starting with the amount of accrual-basis net
income, adjustments are made for changes in accounts receivable,
inventories, prepaid expenses, and operating liabilities—and depreciation
expense is added back (as well as any other noncash outlay
expense)—to arrive at cash flow from profit, which is formally labeled
cash flow from operating Activities in the externally reported statement
of cash flows.


Cash Flow Provided by Operating Activities

With some exceptions, the cash effects of transActions
that enter into the determination of net income, such as cash receipts from sales of goods
and services and cash payments to suppliers and employees for acquisitions of inventory and
expenses.


Cash Flow Provided or Used from Financing Activities

Cash receipts and payments involving
liability and stockholders' equity items, including obtaining cash from creditors and repaying
the amounts borrowed and obtaining capital from owners and providing them with a return on,
and a return of, their investments.


Cash Flow Provided or Used from Investing Activities

Cash receipts and payments involving
long-term assets, including making and collecting loans and acquiring and disposing of
investments and productive long-lived assets.


CASH FLOWS FROM FINANCING ACTIVITIES

A SECtion on the cash-flow statement that shows how much cash a company raised by selling stocks or bonds this year and how much was paid out for cash dividends and other finance-related obligations.


CASH FLOWS FROM INVESTING ACTIVITIES

A SECtion on the cashflow statement that shows how much cash came in and went out because of various investing Activities like purchasing machinery.


Cash settlement contracts

Futures contrActs, such as stock index futures, that settle for cash, not involving
the delivery of the underlying.


Cash transaction

A transAction where exchange is immediate, as contrasted to a forward contrAct, which
calls for future delivery of an asset at an agreed-upon price.


Changes in Financial Position

Sources of funds internally provided from operations that alter a company's
cash flow position: depreciation, deferred taxes, other sources, and capital expenditures.


Characteristic line

The market model applied to a single SECurity. The slope of the line is a SECurity's beta.


chief financial officer (CFO)

Officer who oversees the treasurer and controller and sets overall financial strategy.


Claim dilution

A reduction in the likelihood one or more of the firm's claimants will be fully repaid,
including time value of money considerations.


Collection fractions

The percentage of a given month's sales collected during the month of sale and each
month following the month of sale.


Common Shares

Are equity instruments that take no SECurity against assets, have no fixed terms of repayment and pay no fixed dividends.


Company Acquisitions

Assets acquired to create money. May include plant, machinery and equipment, shares of another company etc.


company cost of capital

Expected rate of return demanded by investors in a company, determined by the average risk of the company’s assets and operations.


Company-specific risk

Related: Unsystematic risk


Companyspecific Risk

See asset-Specific risk


Competitive offering

An offering of SECurities through competitive bidding.


Completed-Contract Method

A contrAct accounting method that recognizes contrAct revenue
only when the contrAct is completed. All contrAct costs are accumulated and reported as expense
when the contrAct revenue is recognized.


computer-aided manufacturing (CAM)

the use of computers to control production processes through numerically
controlled (NC) machines, robots, and automated assembly systems


computer integrated manufacturing (CIM)

the integration of two or more flexible manufActuring systems through the use of a host computer and an information networking system


Concession agreement

An understanding between a company and the host government that specifies the
Rules under which the company can operate locally.


concurrent engineering

see simultaneous engineering


Conditional Sale Agreement

An agreement entered into between a conditional buyer and a conditional seller setting out the terms under which goods change hands.


Conditional sales contracts

Similar to equipment trust certificates except that the lender is either the
equipment manufActurer or a bank or finance company to whom the manufActurer has sold the conditional
sales contrAct.


Confidentiality Agreement

A legal document whereby the one party, usually the prospective investor, pledges to keep strictly confidential, and return on request, any and all information provided by the entrepreneur seeking funding.


Consolidated Omnibus Budget Reconciliation Act (COBRA)

A federal Act
containing the requirements for offering insurance to departed employees.


Consumer Credit Protection Act

A federal Act specifying the proportion of
total pay that may be garnished.


Contract

A term of reference describing a unit of trading for a financial or commodity future. Also, the Actual
bilateral agreement between the buyer and seller of a transAction as defined by an exchange.


Contract

A formal written statement of the rights and obligations of each party to a transAction.


Contract Accounting

Method of accounting for sales or service agreements where completion
requires an extended period.


contract manufacturer

an external party that has been granted an outsourcing contrAct to produce a part or component for an entity


Contract month

The month in which futures contrActs may be satisfied by making or accepting a delivery.
Also called value managers, those who assemble portfolios with relatively lower betas, lower price-book and
P/E ratios and higher dividend yields, seeing value where others do not.


contract vendor

an external party that has been granted an
outsourcing contrAct to provide a service Activity for an entity


Contract Work Hours and Safety Standards Act

A federal Act requiring federal contrActors to pay overtime for hours worked exceeding 40 per week.


Conversion factors

Rules set by the Chicago Board of Trade for determining the invoice price of each
acceptable deliverable Treasury issue against the Treasury Bond futures contrAct.


Convertible security

A SECurity that can be converted into common stock at the option of the SECurity holder,
including convertible bonds and convertible preferred stock.


Corporate financial management

The application of financial principals within a corporation to create and
maintain value through decision making and proper resource management.


Corporate financial planning

financial planning conducted by a firm that encompasses preparation of both
long- and short-term financial plans.


cost avoidance

the prActice of finding acceptable alternatives
to high-cost items and/or not spending money for
unnecessary goods or services


Cost company arrangement

Arrangement whereby the shareholders of a project receive output free of
charge but agree to pay all operating and financing charges of the project.


cost of goods manufactured (CGM)

the total cost of the
goods completed and transferred to Finished Goods Inventory
during the period


Cost of manufacture

The cost of goods manufActured for subsequent sale.



 

 

 

 

 

 

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