- FINRA (Financial Industry Regulatory Authority)
- A self-regulatory organization (SRO) authorized by Congress to oversee U.S. broker-dealers and their registered representatives. It writes and enforces industry rules, administers qualification exams, and operates under SEC oversight.
- SEC (Securities and Exchange Commission)
- The primary federal regulator of the U.S. securities markets, created by the Securities Exchange Act of 1934. It enforces securities laws, requires public-company disclosure, and oversees SROs such as FINRA and the exchanges.
- Broker-Dealer
- A firm (or person) in the business of buying and selling securities. It acts as a broker (agent) when executing trades on a customer's behalf for a commission, and as a dealer (principal) when trading securities from its own inventory for a markup or markdown.
- Equity Security (Common Stock)
- A security representing an ownership stake in a corporation. Common stockholders typically have voting rights and may receive dividends, but they hold the last claim on assets in a liquidation, behind creditors and preferred shareholders.
- Bond (Debt Security)
- A debt instrument in which an investor lends money to an issuer in exchange for periodic interest payments and repayment of principal (par value) at maturity. Bondholders are creditors, not owners, and are paid before stockholders in a liquidation.
- Preferred Stock
- An equity security that pays a fixed, stated dividend and has priority over common stock for dividends and in liquidation. Preferred shares generally carry no voting rights and behave much like a fixed-income investment.
- Prospectus
- A formal disclosure document that must be delivered to investors in a public offering, detailing the security, the issuer's business, financials, and risks. It is derived from the registration statement filed with the SEC under the Securities Act of 1933.
- Mutual Fund (Open-End Investment Company)
- A pooled investment vehicle that continuously issues and redeems shares at net asset value (NAV). Investors buy and redeem shares directly with the fund rather than trading them on an exchange.
- Money Laundering / AML (Anti-Money Laundering)
- Money laundering is the process of disguising illegally obtained funds as legitimate, and AML refers to the laws and procedures (such as those under the Bank Secrecy Act) that firms follow to detect and prevent it. Firms must file Suspicious Activity Reports (SARs) and Currency Transaction Reports (CTRs) as part of compliance.
- Securities Industry Essentials (SIE) Exam
- An entry-level FINRA exam that assesses basic knowledge of the securities industry, including products, risks, market structure, and regulatory bodies. It can be taken without firm sponsorship and is a prerequisite to the top-off qualification exams.
- Primary Market vs. Secondary Market
- The primary market is where new securities are issued and sold to investors for the first time, with proceeds going to the issuer (e.g., an IPO). The secondary market is where those already-issued securities trade among investors, with proceeds going to the selling investor rather than the issuer.