Sometimes it is difficult to know which part of the law applies to you, especially if you are dealing with what an outsider may view as a complicated financial dispute. If you have North Carolina securities, where do you go for help? Rest assured, there are business and financial law attorneys who can advise you regarding the values you may have. But until you’ve hired the services of a local attorney, let’s get up to speed on securities law terminology so you’re ready for your first appointment.
What are values?
A security is a negotiable and fungible instrument that represents a financial security. Most securities will be represented by a certificate or, more commonly, they will only be in electronic form (not certified). As in the rest of the country, North Carolina securities certificates will be “bearer” or “registered.” A bearer security certificate is one that grants rights to the holder simply by owning the security. A registered certificate is one that only grants the holder rights if his name appears in a securities registry maintained by the issuer or the issuer designated as an intermediary.
Securities include shares of corporate stocks or mutual funds, bonds issued by corporations or governments, stock options or other options, limited partnership units, and various other formal investment instruments. In North Carolina, securities can be issued by commercial companies, government agencies, local authorities, and international and supranational organizations (such as the World Bank). The main objective of the purchase of securities is investment, with the ultimate objective of receiving income or capital gains; (Capital gain is the difference between a lower purchase price and a higher sale price).
The securities are broadly classified into three categories.
1. Representative debt securities:
These include debentures, bonds, deposits, notes, and commercial paper (in some circumstances). If you own one of these debt securities, your North Carolina securities attorney will advise you that you are generally entitled to payment of principal and interest on it. There may also be contractual rights that a good lawyer will advise you on, including the right to information.
Debt securities are usually fixed-term securities repayable at the end of the term, they may be secured or unsecured or protected by a guarantee. Debt securities can offer investors some control whether the company is a start-up company or an established company undergoing “restructuring.” In these cases, if interest payments are defaulted, creditors can take control of the company and liquidate it to recoup part of their investment. People prefer to buy debt securities due to the generally higher rate of return than bank deposits. However, government-issued debt securities (bonds) typically carry a lower interest rate than securities issued by commercial companies. This applies nationally and to North Carolina values.
2. Equity securities:
Common shares are the most popular type of share guarantee. Investors are called shareholders and they own a stake in the capital stock of a company, trust or partnership. It’s like saying that someone who invests in equities is buying a small part of a company (or a large part, depending on their budget!). As an investor, you are not necessarily entitled to any payments, such as the regular payment of interest on a debt security. If a company goes bankrupt, it may lose its entire investment, as the shareholders are paid in the end. If this happens, it might be a good time to call your North Carolina securities attorney for advice.
On the positive side, investing in equities can give shareholders access to earnings and capital gains, something that debt securities cannot. The holder of debt securities receives only interest and repayment of the principal regardless of how well the issuer performs financially. Equity investment can also offer control of the issuer’s business.
3. Derivatives contracts:
If you have invested in forwards, futures, options and / or swaps, you have probably bought a derivative. A derivative is perhaps, obviously, derived from some other asset, index, event, security, or condition (known as the underlying asset). Rather than trading or exchanging the underlying asset, derivatives traders enter into agreements to exchange cash or assets over time based on the underlying asset. A simple example is a futures contract – an agreement to exchange the underlying asset at a future date.
An attorney can provide more information on securities.
Please note that this is not an exhaustive list of legitimate forms of securities. If you bought what you were led to believe was a security guy, but it’s not covered in the information here, don’t panic! However, for your peace of mind, contact a securities attorney if you believe you have been a victim of securities fraud, have been charged with securities fraud or a related crime, or simply have a legal question about the purchase or sale. values.