GlossaryGuide

Mortgage-backed securities (MBS) are debt obligations that represent claims to the cash flows from pools of mortgage loans, most commonly on residential property. Mortgage loans are purchased from banks, mortgage companies, and other originators and then assembled into pools by a governmental, quasi-governmental, or private entity. The entity then issues securities that represent claims on… Continue reading MORTGAGE-BACKED SECURITIES AND COLLATERALIZED MORTGAGE OBLIGATIONS

A market that provides trading in short-term debt.

A money market fund is a type of mutual fund that has relatively low risks compared to other mutual funds and most other investments and historically has had lower returns. Money market funds invest in high quality, short-term debt securities and pay dividends that generally reflect short-term interest rates. Many investors use money market funds to store… Continue reading MONEY MARKET FUND

“Mini-tender” offers are tender offers that, when consummated, will result in the person who makes the tender offer owning less than five percent of a company’s stock. The people behind these offers—also known as “bidders”—frequently use mini-tender offers to catch shareholders off guard. Most bidders won’t use the term “mini-tender offer” to describe their offer… Continue reading MINI-TENDER OFFERS

The term “microcap stock” (sometimes referred to as “penny stock”) applies to companies with low or micro market capitalizations.  Companies with a market capitalization of less than $250 or $300 million are often called “microcap stocks” – although many have market capitalizations of far less than those amounts.  The smallest public companies, with market capitalizations of… Continue reading MICROCAP STOCK

Mergers are transactions involving the combination of generally two or more companies into a single entity. The need for shareholder approval of a merger is governed by state law.  Typically, a merger must be approved by the holders of a majority of the outstanding shares of the target company.  Approval of the acquiring company’s shareholders… Continue reading MERGERS

Arbitration, a form of alternative dispute resolution, is a technique for the resolution of disputes outside the court system.  The parties to a dispute refer it to arbitration by one or more persons and agree to be bound by the arbitration decision. Most account agreements between broker-dealers and their customers have arbitration clauses.  The arbitration… Continue reading MEDIATION AND ARBITRATION

If you hold securities in physical certificate form and want to transfer or sell them, you will need to sign the certificates and securities powers–a legal document, separate from a securities certificate that investors use to transfer or assign ownership to another person or entity. You will need to get your signature guaranteed on all… Continue reading MEDALLION SIGNATURE GUARANTEES: PREVENTING THE UNAUTHORIZED TRANSFER OF SECURITIES

When a broker-dealer sells you securities out of its inventory, the broker-dealer acts as a principal in the transaction (that is, selling to you directly the securities it holds).  When acting in a principal capacity the broker-dealer generally will be compensated by selling the security to you at a price that is higher than the… Continue reading MARKUPS

For information on circuit breakers and other market volatility procedures please read our investor bulletin “New Measures to Address Market Volatility.”