This is a glossary of terms that are, for the most part, unique to the world of financial investigations, or terms that have a different meaning than that which is commonly understood when they are used in this context.

S&P (Standard & Poor's Corporation): Acronym for Standard & Poor's, a provider of a wide variety of investment-related services including ratings for bonds, stocks, and commercial paper; publishing statistical information and reports; and compiling indexes, including the Standard & Poor's Index of 500 Stocks.

SA (Societe Anonyme): A limited liability corporation established under French Law. Requires a minimum of seven shareholders. In Spanish speaking countries, it is known as the Sociedad Anonima. Important characteristic of both is that the liability of the shareholder is limited up to the amount of their capital contribution.

Safe Harbor: The "Safe Harbor for Forward-Looking Information" allows company management to discuss in good faith a company's prospects and financial projections with analysts and investors without fearing litigation. (From the Private Securities Litigation Reform Act of 1995.)

Sales Charge: A fee paid to a broker in connection with the purchase of a load mutual fund or a limited partnership. The sales charge, or load, generally decreases as the size of the investment increases.

Same Day Substitution: The purchase and sale of securities on the same day in a margin account, both having equal dollar value. When a same-day substitution is made, a margin call is not generated, and there is no credit release to the special miscellaneous account (SMA). A long sale and a short sale are also considered a same-day substitution.

Same Side Of The Market: In options, it relates to the investor's expectations for the underlying security--that is either bullish or bearish. Short calls and long puts are bearish. Long calls and short puts are bullish.

Saucer: A technical chart pattern that indicates a security's price has begun to increase after declining and bottoming out. An inverse saucer has a reverse pattern characterized by a decline after increasing and then reaching a plateau.

Script Certificate: A fractional share of a stock issued by a corporation.

Seasonal Stock: A stock whose value fluctuates due to holidays, vacations, and changes in the climate. For instance, a toy company may experience an increase in sales and earnings during the Christmas season.

Seat: Membership on an exchange.

SEC (Securities And Exchange Commission): A federal agency created in 1934 by an act of Congress to regulate various aspects of the securities industry. The SEC is made up of five commissioners, each appointed by the President, with the advice and consent of the Senate, for a five-year term. In order to ensure the political independence of the commissioners, no more than three may be from the same political party at any one time. The statutes administered by the SEC are designed to promote full public disclosure and protect the investing public against fraudulent and manipulative practices in the securities markets. Generally, most issues of securities offered in interstate commerce or through the mails must be registered with the SEC.

SEC Fee: A nominal fee charged by the SEC on the sale of listed equity securities.

Secondary Distribution: The sale of previously issued shares of a security to the public. Usually these are shares owned by large institutions or corporations, rather than by the issuer as is the case with an initial public offering. The sale is usually not handled on an exchange, but instead is handled by an investment banker or group of investment bankers. Also known as a "secondary offering".

Secondary Market: The trading in existing or outstanding shares of securities as opposed to new issues, or initial public offerings. Transactions in the secondary market occur either on an exchange or in the over the counter market.

Sector Fund: A mutual fund that invests in the stocks of a particular industry, such as the airline industry.

Securities And Exchange Commission (SEC): A federal agency created in 1934 by an act of Congress to regulate various aspects of the securities industry. The SEC is made up of five commissioners, each appointed by the President, with the advice and consent of the Senate, for a five-year term. In order to ensure the political independence of the commissioners, no more than three may be from the same political party at any one time. The statutes administered by the SEC are designed to promote full public disclosure and protect the investing public against fraudulent and manipulative practices in the securities markets. Generally, most issues of securities offered in interstate commerce or through the mails must be registered with the SEC.
Securities Exchange Act Of 1933: An act of Congress which governs the issuance of new issues of securities. It requires the registration of securities, disclosure of pertinent information relating to new issues so that investors may make informed decisions.

Securities Exchange Act Of 1934: An act of Congress which created the Securities and Exchange Commission and governs the securities markets.

Securities Industry Association (SIA): A trade association for broker-dealers.

Securities Investor Protection Corporation (SIPC): A nonprofit corporation established by an act of Congress in 1970 in order to protect the customers of brokerage firms from the insolvency of those firms. All broker-dealers registered with the Securities and Exchange Commission and with a national exchange are required to join. SIPC provides up to $500,000 in protection, of which no more than $100,000 may be in cash.

Security: Any instrument that represents ownership, or the right to ownership, of a corporation, or that represents the debt of a corporation. Shares and debt obligations of every kind, including options, warrants, and rights to acquire shares and debt obligations.

Seek a Market: To look for a buyer or a seller.

Self Directed IRA: Individual retirement account that is managed by an account holder who appoints a custodian to carry out instructions. This kind of IRA is subject to the same types of restrictions and limitations as a regular IRA.

Self Regulatory Organization (SRO): An entity, such as the NASD, responsible for regulating its members through the adoption and enforcement of rules and regulations governing the business conduct of its members.

Sellers Market: A situation where demand for a security or product exceeds supply, thereby causing an increase in the price of the security or product and allowing sellers to set the terms of sale.

Seller's Option Contract: A transaction in which normal settlement cycles are not followed, and instead the seller has the right to make delivery within a specified period of time, ranging from not less than six business days to not more than 60 calendar days. The seller is required to provide written notification to the buyer one full business day prior to making delivery.

Selling Climax: A sudden drop in the market due to panic on the part of investors.

Selling Dividends: An practice whereby a broker encourages a customer to buy mutual fund shares in order to receive an anticipated dividend. Since the dividend is part of the net asset value of the fund and already reflected in the price, the customer earns no benefit by purchasing the fund prior to the scheduled dividend.

Selling Off: The act of selling securities in a panic situation in order to avoid a greater loss than already sustained.

Selling On The Good News: The act of selling a security shortly after a positive news article is disseminated to the public. Very often, investors are eager to buy a stock if there is good news, thereby pushing the price up. Sellers who think the stock has peaked will sell on the good news rather than risk a subsequent decline.

Selling Short: The sale of a security that the investor does not own in order to take advantage of an anticipated decline in the price of the security. In order to sell short, the investor must borrow the security from his broker in order to make delivery to the buyer. The short seller will eventually have to buy the security back, or buy to cover, in order to return it to the broker. Short selling is regulated by Regulation T of the Federal Reserve Board and Securities and Exchange Commission rules allow investors to sell short only when a stock price is moving upward. This prevents "pool operators" from driving down a stock price through heavy short-selling, then buying the shares for a large profit.

Selling Short Against The Box: A short sale where the investor owns the security, but does not want to use the shares for delivery, so he borrows them from the brokerage firm. This is usually done to lock in a profit, while delaying the tax consequences to a subsequent year.

Sell Out Procedures: Liquidation of a margin account that has failed to meet the equity requirements established by margin regulations, or liquidation of a security that has not been paid for by the customer in accordance with industry regulations.

Sell Stop Order: An order to sell a security at the market price once the security trades through a specified price, called the stop price.

Senior Securities: Debt securities and preferred stocks. These securities are senior to common stock because they have prior claim to a corporation's assets in the event of bankruptcy.

Sensitive Market: A market highly susceptible to new announcements, either good or bad.

SEP (Simplified Employee Pension): Acronym for simplified employee pension plan, a type of pension plan whereby both the employee and employer contribute to the employee's individual retirement account.

Series Of Options: All call or put options on a security having the same exercise price and expiration date. For example, all XYZ October 30 calls would comprise a series of options.

Series 7 Exam: Individuals who want to enter the securities industry to sell any type of securities must take the Series 7 examination—formally known as the General Securities Representative Examination. Individuals who pass the Series 7 are eligible to register with all self-regulatory organizations to trade. NASD administers the Series 7 examination.

Settle: To create or establish an offshore trust. Done by the settlor (offshore term) or the grantor (U.S. and IRS term).

Settlement: The conclusion of a securities transaction, as evidenced by the seller delivering the security and the buyer paying for it. Most securities, but not all, settle in three business days.

Settlement Date: The date upon which the buyer and seller of a security are expected to settle a transaction, as evidenced by the seller delivering the security and the buyer paying for it. Most securities, but not all, settle in three business days.

Settlor: One (the entity) who (which) creates or settles an offshore trust.

Share: A single unit of ownership in a corporation or mutual fund.

Shareholder: An individual who owns one or more shares of a corporation or mutual fund. Shareholders may earn dividends and shareholders of common stock have voting rights with regard to matters that affect the corporation.

Shareholder's Equity: The assets of a corporation minus the liabilities of the corporation. Also called equity, or net worth.

Short and Distort: A securities scam where traders manipulate stock prices by taking short positions and then using a smear campaign to drive down the price of the targeted stock. This is the inverse version of the "pump and dump" tactic, whereby crooks buy stock (take a long position) and issue false information that causes the target stocks price to increase. Short and distort players clutter message boards, so optimistic information cannot easily be found. "Get out before it all comes crashing down" and "Investors who wish to enter a class action lawsuit can contact…" are typical posts.

Short Covering: Buying stock in order to close out, or cover, a position previously created by a short sale.

Short Interest: The total number of shares that have been sold short and have yet to be repurchased.

Short Interest Theory: The belief that a large short interest in a particular security means the market price of the security is about to increase because the short positions must eventually be covered, or repurchased. The theory asserts that this cushion of potential buyers will serve to support a declining market or accelerate a rising market.

Short Market Value: The number of shares of a short security multiplied by the current market price.

Short Position: Stock shares that an individual has sold short and has not yet covered, as of a particular date.

Short Squeeze: A situation that occurs when the price of a security increases dramatically, thus pressuring short sellers to cover their short positions in order to avoid greater losses. The covering of short positions serves to raise the price of the security even more, thus increasing the losses of short sellers who have still not covered their short positions.

Short Swing Profit: A profit earned on a security held less than six months. Insiders are prohibited from taking short swing profits on the stock of their firm.

Short Term: An investment with a maturity of a year or less.

Short Term Debt: A debt obligation due within a year.

Short Term Gain (Loss): A realized profit or loss on an investment held for six months or less.

SIA (Securities Industry Association): A trade association for broker-dealers.

Sideways Market: Situation that occurs when prices move within a narrow range, with minimal fluctuations.

Simplified Employee Pension Plan (SEP): A type of pension plan whereby both the employee and employer contribute to the employee's individual retirement account.

Simultaneous Transaction: A transaction which involves no risk for the broker-dealer because he is able to match purchase and sale orders for customers.

SIPC (Securities Investor Protection Corporation): A nonprofit corporation established by an act of Congress in 1970 in order to protect the customers of brokerage firms from the insolvency of those firms. All broker-dealers registered with the Securities and Exchange Commission and with a national exchange are required to join. SIPC provides up to $500,000 in protection, of which no more than $100,000 may be in cash.

Situs or site: The situs is the domicile or dominating or controlling jurisdiction of the trust. It may be changed to another jurisdiction, to be sited in another country or U.S. state.

Size: The number of shares that are available at a particular price.

SL (Sold): Abbreviation for sold.

SMA (Special Miscellaneous Account): A memorandum account that records a customer's excess margin and buying power. Excess funds may come from several sources: sales proceeds, market value appreciation, dividends, and cash or securities put up in response to a margin call.

Small Investor: An individual that purchases small quantities of stocks and bonds--also called "retail investor".

Smurfing: The act of structuring financial transactions to avoid reporting requirements.

Societe Anonyme (SA): A limited liability corporation established under French Law. Requires a minimum of seven shareholders. In Spanish speaking countries, it is known as the Sociedad Anonima. Important characteristic of both is that the liability of the shareholder is limited up to the amount of their capital contribution.

Soft Market: A market characterized by excess supply, thus causing a decrease in prices. Also called a buyer's market.

Sparbuch: An Austrian numbered savings account in which the issuing bank has no information whatsoever regarding the identity of their customer account holder. Accounts are accessed by account number and password – anyone in possession of both can access the funds in the account.

Special Custodian: An appointee of the trustee in an APT.

Special Investment Advisor: An appointee of the trustee in an APT.

Specialist: A member of an exchange who is responsible for maintaining a fair and orderly market in those securities for which he is registered. The specialist accomplishes this by buying and selling for his own account to reduce any temporary disparities between supply and demand, to the extent possible. The specialist may also act as a broker's broker by executing orders for other members in return for a share of the commission.

Special Miscellaneous Account (SMA): A memorandum account that records a customer's excess margin and buying power. Excess funds may come from several sources: sales proceeds, market value appreciation, dividends, and cash or securities put up in response to a margin call.

Special Purpose Funds: Funds that invest primarily in a certain industry or group of related industries, or in a certain geographic area.

Specific Performance: The legal remedy of performance of a contract in the specific form in which it was made, according to the precise terms agreed upon.

Speculation: Purchasing high-risk investments which may provide above average gains, but also carry a higher than average possibility for loss of principal.

Speculator: An investor who is willing to assume great risk in return for potentially great rewards.

Split: Partitioning the outstanding shares of a corporation into a larger number of shares, without affecting shareholders' equity or the total market value at the time of the split. For instance, if a stock valued at $100 splits 2-for-1, an investor who owns 100 shares would now own 200 shares valued at $50.

Spot Market: Commodities market in which commodities are sold for cash and immediate delivery takes place.

Spousal IRA: An individual retirement account (IRA) opened in the name of a nonworking spouse. A married couple that establishes such an IRA may contribute up to $2,250 between two IRAs as long as neither account exceeds a contribution of $2,000. If both spouses were employed, they could each contribute up to $2,000 for a combined total of $4,000.

Spread: 1) The difference between a security's bid and asked price. 2) The difference between a new issue's public offering price and the proceeds received by the issuer--commonly know as the "underlying spread."

Spread Option: The simultaneous purchase and sale of options of the same type and of the same class. For example, an investor may purchase an XYZ September 50 call and sell an XYZ September 40 call.

Spread Position: The existence of a spread option in an account, i.e. a long and short position in options of the same class and type.

Squeeze: A situation that occurs when the price of a security increases dramatically, thus pressuring short sellers to cover their short positions in order to avoid greater losses. The covering of short positions serves to raise the price of the security even more, thus increasing the losses of short sellers who have still not covered their short positions.

SRO (Self Regulatory Organization): An entity, such as the NASD, responsible for regulating its members through the adoption and enforcement of rules and regulations governing the business conduct of its members.

Standard & Poor's Corporation (S & P): A provider of a wide variety of investment-related services including rating bonds, stocks, and commercial paper; publishing statistical information and reports; and compiling indexes, including the Standard & Poor's Index of 500 Stocks.

Standard & Poor's 500 Index: A composite index that tracks 500 industrial, transportation, public utility, and financial stocks. The selection of stocks included in the index is determined by Standard & Poor's Corporation, which also publishes the index.

Statute of Limitations: Any law which establishes the time within which a criminal charge or civil action may be pursued. For example, the Code of Arbitration states that no claim shall be eligible for submission to arbitration where six years have elapsed from the occurrence or event giving rise to the controversy.

Statutory: That which is fixed by statutes, as opposed to Common Law.

Statutory Voting: A method of voting whereby a shareholder receives one vote for each share and may cast his votes for each of the directorships. A shareholder, for example, who owns 1000 shares of a corporation that is electing three directors, can cast 1000 votes for each of the three candidates.

Stiftung: A Liechtenstein form of private foundation.

Stock: Ownership of a corporation as evidenced by shares which are a claim on the corporation's earnings and assets.

Stock Ahead: A condition that occurs when an order is not executed because there are other orders awaiting execution, which were entered earlier, at the same price. If two orders are entered for the same price at the same time, the order for the larger number of shares takes precedence.

Stock Buyback: A corporation's purchase of its own shares, usually to discourage a takeover attempt.

Stock Certificate: A document evidencing ownership in a corporation.

Stock Dividend: A dividend that is paid in securities, rather than cash. The additional shares may be of the issuing company, or of a subsidiary.

Stock Exchange: An organized marketplace where members gather to trade securities. Members may act either as agents for customers, or as principals for their own accounts.

Stockholder: An individual who owns one or more shares of a corporation's stock, whether common or preferred stock. Stockholders may earn dividends and stockholders who have common stock have voting rights with regard to matters that affect the corporation.

Stockholder Of Record: A stockholder whose name is registered on the books of the issuing corporation as owning the shares as of a particular date. Dividends and other distributions are made to stockholders of record.

Stockholders' Equity: The total equity ownership of a corporation by its shareholders, consisting of preferred stock, common stock, retained earnings, and capital surplus. It is the difference between a company's total assets and total liabilities.

Stock Power: A form used in the transfer of registered securities from one owner to another. A stock power replicates the assignment form on the back of the stock certificate, but it is separated from the certificate. Hence, a stock power is sometimes called an "assignment separate from certificate". Although both achieve the same goal, a stock power has a safety advantage in being separate.

Stock Split: Partitioning the outstanding shares of a corporation into a larger number of shares, without affecting shareholders' equity or the total market value at the time of the split. For instance, if a stock valued at $100 splits 2-for-1, an investor who owns 100 shares would now own 200 shares valued at $50. Splits usually must be voted on by directors and approved by shareholders.

Stock Symbols: A unique code, using all letters, given to all securities trading on the NYSE, AMEX or NASDAQ. The symbols identify the corporation and facilitates trading and ticker reporting.
Stop Limit Order: A combination of a stop order and limit order--that is, the order becomes a limit order after the specified stop price has been reached.

Stop Order: An order that becomes a market order when a round lot in an NYSE or AMEX listed security trades at or through a specified price (stop price) or when the national best bid in a NASDAQ listed security reaches the specified price. A stop order is usually used to protect paper profits or limit the extent of possible losses.

Stopped Stock: A term used by a specialist who guarantees that a public order to buy or sell will be executed at the best bid or offer price in his book, unless it can be executed at a better price within a certain time period. This allows brokers to possibly obtain a better price for their clients without the fear of missing the market (if buying--the security rises, if selling--the security drops). For example, a broker with a market order to buy is stopped at 22 by a specialist. This means that the broker will not pay more than 22 for the stock, but may be able to buy at a better price.

Street: Slang for "Wall Street". It is used to refer to the investing community as a whole.

Street Name: Said of securities held in the name of the broker-dealer rather than in the name of the client. The client remains the beneficial owner. All dividends that would otherwise be mailed directly from the company to the stockholder are credited to the client's account or forwarded as the client directs. Corporate reports and proxy statements are forwarded to the customer. This arrangement allows shares to be transferred easily. If the stock were registered in the customer's name rather than the broker's name, physical certificates would need to be transferred.

Strike Price: The predetermined exercise price of a put or call option--also called "striking price".

Structuring: Conducting financial transactions in a manner calculated to evade reporting requirements.

Subject: Term used by a dealer giving bids and/or offers that must be reviewed before a final decision to buy or sell can be made.

Subscription Right: A certificate that evidences a shareholder's privilege to buy additional shares of new securities in proportion to the number of shares already owned. A company, when raising more funds by issuing new securities, may issue rights to its shareholders to give them the chance to buy additional shares before the general public. Because rights usually allow the stockholder to buy below the current market price, they ordinarily have a value of their own and are actively traded. Most rights are valid for a relatively short period. Failure to exercise or sell rights may result in monetary loss.

Subscription Warrant: A certificate that gives a shareholder the right to purchase a security at a specified price within a predetermined time period or perpetually. At the issuance of the warrant, the specified price is usually higher than its current market value. Corporations issue warrants directly and they are sometimes offered along with a security as incentive to buy. Warrants are transferable and are traded on major stock exchanges. The abbreviation "WT" is used in newspaper stock listings.

Suitability: Like “Churning,” the issue of suitability is a common basis for an arbitration award and it is something that any investigator handling cases involving securities issues must understand. A suitability violation occurs when and investment made by a broker is inconsistent with the investor's objectives, and the broker knows or should know the investment is inappropriate.
For example, Thelma Lou is a sixty-eight year old widow, and retired school teacher, who has $350,000 she received following the death of her husband which represents her total net worth. Joe Broker invests this money in volatile derivatives and loses most of it. Although there was no fraud, and Thelma Lou approved every trade, a risky investment of this nature is wholly unsuitable and Thelma Lou would almost undoubtedly recover her losses in arbitration.

Support Level: The lower level of a security's trading range where buying pressure tends to bid up the price of the security. That is, its price stops falling because there is more demand for the security than there is supply. If, however, the security's price falls below its support level, analysts consider this to be very bearish.

Suspended Trading: A halt in the trading of a particular security that is usually temporary. This may occur because of an imbalance of buy and sell orders, or because of a significant news announcement.
Sweetener: A feature, such as being convertible or having a right or warrant attached, that is added to security offerings to make it more attractive to investors.

Switching: In mutual funds, the movement of assets from one fund to another. This is usually done within a family of funds, but can be done between different fund families. Within a no load family, there usually is no charge or a nominal transaction fee. This is also usually true for a load family as long as the fund being switched into has the same sales charge (or less) as the one that the investor already owns. When switching to a mutual fund that belongs to a different family of funds, if the new fund is a no load--there is no charge, and if the new fund is a load fund--it is sales charge of the new fund. An investor will switch mutual funds when their investment objectives change or because of market conditions.

Systematic Risk: Risk that is common to all securities of the same class (stocks, bonds, options)--also known as "market risk". This risk cannot be eliminated by diversifying one's portfolio.

I welcome your comments, questions and suggestions.