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In an "Alert Investor" newsletter, FINRA's
Office of Investor Education ("OIE") reviewed six common
types of public company corporate actions and how they impact
investments. FINRA defined "corporate action" as "an
event by a public company that may affect the company's
securities and, therefore, its shareholders and bondholders."
OIE focused on:
Name or Trading Symbol
Changes, which may require a company to obtain a new CUSIP
number;
Stock Splits, which
change the number of shares owned by a shareholder, but do not
affect a shareholder's proportionate equity in a company;
Dividends, which
result in shareholders receiving a portion of a company's
earnings through cash or stock distributions;
Mergers and
Acquisitions, which involve two companies agreeing to
become a single entity, or one company purchasing a majority of
another company's stock;
Rights Offerings,
which entitle shareholders to buy additional shares directly from a
company in proportion to their existing holdings; and
Liquidation and
Dissolution, in which assets are sold and potentially
redistributed to shareholders.
FINRA further explained that it is responsible for processing
corporate action announcement requests for companies that trade in
the over-the-counter marketplace. FINRA reviews such requests for
compliance with applicable laws and regulations, but does not
approve or disapprove of the actions. FINRA warned investors that
any company claiming FINRA "approval" of a corporate
action is not sharing accurate information, and listed resources
that can provide further information.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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