Common Stock: Rapid Fire
Chapters in this video
- 0:00 Carla the customer and residual ownership rights
- 1:17 Authorized, issued, outstanding shares and treasury stock
- 2:29 Statutory versus cumulative voting
- 3:00 Par value traps and liquidation priority order
- 3:32 Riley the rep: spinoff and merger cost basis rules
- 4:30 Penny stock definition and exchange-listed exception
- 5:10 Issuer exemptions for net tangible assets and revenue
- 6:04 Suitability waivers versus total exemptions
- 6:44 OTC equity recommendation review rule
- 7:00 Rapid-fire exam recap
What this video covers
- How authorized, issued, and outstanding shares nest, and why treasury stock equals issued minus outstanding with no voting rights or dividends
- Why statutory voting favors majority holders while cumulative voting (shares x open seats) empowers minority shareholders
- Where common stock lands in liquidation priority: after secured creditors, unsecured creditors, subordinated debt, and preferred stock
- How spinoffs split cost basis by relative fair market value while mergers substitute the old basis, with holding period tacking on for both
- What defines a penny stock: unlisted and strictly under $5 per share, with exchange-listed stocks excluded regardless of price
- When issuer exemptions apply for net tangible assets ($2 million with 3+ years operating, or $5 million under 3 years) and average revenue ($6 million)
- The critical distinction between suitability-statement-only waivers (account age or prior purchases) versus total exemptions (unsolicited, institutional accredited, issuer insiders)
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