Earnings release/earnings report. Most corporations issue press releases regarding their quarterly and year-end financial results before filing their reports to the SEC, or mailing their annual or quarterly reports. This gets the news to investors more quickly and lets the corporation put its own spin on it. Many corporations schedule their earnings releases, so that analysts know when to expect them.

Fiduciary relationship. A fiduciary relationship exists when a person claims to act in the best interests of, or in behalf of, another, and the other accepts that trust.

Going public. When a privately held company successfully makes a public securities offering. See "Initial Public Offering."

Information statement. When a stockholder vote is held and management does not solicit proxies, there is no need for a proxy statement. In such instances, before the voting the issuer files with the SEC and provides to shareholders an information statement containing information substantially the same as that found in a proxy statement.

Initial public offering (IPO). A company's first public offering of securities. See "Going Public."

Inside information. Material information about a company that has not been disclosed in a periodic report, press release, or other public communication.

Insider. An insider has a fiduciary relationship with the issuer of securities being traded. Traditional insiders include directors, officers, persons who own more than 10% of a company's stock, employees of the issuing entity, and the issuer itself. See "Fiduciary Relationship."

Insider trading. "Insider trading" is buying or selling a security while having material, nonpublic information about the security, in breach of a fiduciary duty or other relationship of trust and confidence. Insider trading may also include "tipping" such information, securities trading by the person "tipped," and securities trading by persons who misappropriate such information. Insider trading is a felony, and the SEC can levy large civil penalties for violations.

Institutional investor. An organization that routinely buys and sells securities for investment purposes. Institutional investors include banks, mutual funds, and pension funds. They are attractive to companies issuing securities, because they are usually stable and sophisticated investors whose securities purchases can have a significant positive impact on the securities' prices.

Investment agreement. Some stock sales are exempted from registration requirements. When a company sells unregistered stock to an accredited investor-a "private placement" or "limited offering exemption"-an investment agreement is necessary to transact the sale and to safeguard the company from later challenges to the sale. See "Accredited Investor" and "Private Placement."

Investment banker. An organization that advises companies on their capital structure, helps formulate financial strategies and takeover defenses, consults in major transactions, and participates in underwriting.

Limited offering exemption. See "Private Placement."

Listing. Listing occurs when a security is accepted for trading on a stock exchange. Listings are for specific numbers of shares of equity securities or amounts of debt securities.

Low capital. When a company is preparing for an IPO, securities laws deem that a stock offer is unfair and inequitable to public investors if the company's existing capital is less than 10 percent of the overall offering price of the shares it intends to sell.

Managing underwriter. An underwriter who works on behalf of a syndicate of underwriters to perform such functions as: dealing with the registrant; organizing the securities selling effort; or representing other underwriters in such areas as arranging the allotments of offered securities or appropriate stabilization activities.

Material information. Information which, if given to reasonable investors in the marketplace and analyzed by them along with other available information about the securities issuer, would likely cause a security's value to change.

Merit review laws. Merit review laws regulate disclosure and the substantive merits and fairness of a securities offering to investors.

Offering. All methods, private or public, by which companies offer or sell securities to investors.

Offering materials. The prospectus and any other communications that are deemed part of the prospectus because the issuer uses them in its effort to sell securities. Issuers must be careful not to make careless communications that may become offering materials while they are in registration. See "Prospectus," "Quiet Period," and "Registration."

Officer. State corporate laws usually define officers as the corporation's president, any vice-president, secretary, and treasurer. Bylaws usually define officers' titles and responsibilities. Officers are appointed by the board of directors and manage the corporation's day-to-day affairs.