Insider trading is one of the most prominent and notorious methods of Securities Fraud, in which individual brokers or investors are made aware of unauthorized and privileged information with regards to an investment opportunity; typically, this information is not only unavailable to the general public, but is indicative of potential increases or decreases with regard to that company’s stocks:

The term ‘Insider Trading’ is structured as per the inclusion of the word ‘Insider’, which conveys a setting – albeit illegal – in which only presumably privileged  individuals are party to information involving the trade and exchange of stocks.

Insider Trading typically results in preemptive investment activity resulting from privileged – albeit illegal and unlawful information – on the part of those party to the information in question.

In many cases with regard to Insider Trading, an individual involved with a company whose stock is publically traded will share – or sell – information with regard to an event involving the company in question that is expected to drastically alter the behavior of the company’s stock; resulting in opportunities granted in an unlawful and unethical nature to other individual investors.

The true damage of this knowledge takes place outside of the knowledge of the general populace, allowing unfair advantages to the select few privy to the information provided by Insider Trading.

Due to the fact that Insider trading involves the illegal application of information not available to the general populace, the information is garnered from an inside source and can be applied in order to render profit and benefit in investment endeavors. In the event that Insider Tradingoccurs in tandem with Microcap Fraud – a nature of securities fraud occurring as a result of the unlawful regulation of a stocks behavior resulting from mass-selling or purchase – substantial damage can take place:

Due to the decreased price latent within Microcaps – or ‘Penny Stocks’ – a large amount of these stocks can be accessed and subsequently released; as a result, a single individual or entity is afforded the prospective opportunity to control the perceived behavior of that particular stock.

In the case of Microcap Fraud fostered by Insider Trading, an individual – or individuals – may conspire with each other with regard to investment endeavors; collectively, these individuals may secretly agree to conduct mass-purchases or mass-sales of an individual stock, which allows them an unfair advantage with regard to subsequent gains or losses resulting from this activity.

The investigation of commercial operations believed to be conducting Insider Trading activity is undertaken by the Security and Exchanges Commission (SEC), which is the governmental agency responsible for all maintenance of legality with regard to the collective operations and lawful facilitation of activities rooted in securities and investment. The SEC has been responsible for a multitude of investigation involving the discovery of Insider Trading activity; some of which have involved some of the most notorious and noteworthy circumstances – the following include famous Insider Trading investigations, which resulted in criminal prosecution:

         Albert H. Wiggin; Chase National Bank Insider Trading Scandal (1929)

         Dennis Levine; Nabisco Insider Trading Scandal (1986)

         Martha Stewart; ImCloneInsider Trading Case (2003)

         Jeffrey Skilling; ENRON Corporation Insider Trading Case (2004)

         Robert Moffat; New Castle Funds Insider Trading Scandal (2010)

An escrow is a type of arrangement where a third party (typically independent and entrusted) receives and subsequently disburses finances or legal documents to two or more underlying parties aligned with the escrow. The escrow contains contractual provisions, which will state that the third party must deliver the funds or documents at a specified time.

An escrow account is typically established to hold separate funds for the purpose of paying primary bills, such as property taxes, an individual’s homeowner’s insurance, or an insurance premium. The third party, who holds the funds, will subsequently deposit the individual or entity’s funds into the escrow and then use that money to pay monthly bills when they are due. The escrow thus, effectively eliminates the probability of late payments or any issues where additional cash is needed.

The holder of the escrow, will take the annual amounts for the aforementioned bills, divide them by 12, and subsequently establish the payment amount that is then added to the individual’s monthly principal and interest payment. For example, if an individual’s homeowner’s insurance annual premium is $500, their monthly payments are roughly $41. When the bill is due, the holder of the funds will be made available since the money is already placed in the escrow account.

The individual will receive an escrow statement which will explain how the monthly escrow portion of the payment was calculated. Additionally, the escrow statement will estimate the annual expected costs of the individual’s bills. The escrow statement is received annually. 

An escrow generally refers to the funds held by the third-party on behalf of the individual placing the monies in the account. In the United States, an escrow account is best known in the context of real estate; escrows are typically aligned with mortgage payments. In this relationship, a mortgage company will establish an escrow account to deliver funds to the underlying individual to pay property taxes and the insurance policy aligned with the particular mortgage agreement.

Escrow companies are also used in the transfer of valuable assets such as property, both in the real and intellectual sense. As is common with a traditional escrow account, an Internet escrow functions when an individual places money in the control of a licensed and independent third party to help protect the buyer and seller in a specific transaction.

A banking escrow is commonly used in automated teller machines and other forms of vending equipment. In a traditional sense, an ATM is a type of escrow, where a tangible machine holds an individual’s money and is dispersed to the holder when he or she successfully enters the PIN.

Escrow can also be evaluated in a judicial context. These escrow funds are commonly used to distribute funds from a cash settlement in a class action suit or an environmental enforcement action.

The escrow is established when the buyer and seller agree to the terms outlined in the escrow agreement. The contractual agreement must establish a description of the merchandise being exchanged, the sale price, the shipping information of the funds and the number of days listed for the buyer’s inspection.

Once the contract is agreed upon, the buyer must submit an available payment option to the escrow holder. When payment is verified, the seller is then authorized to ship the merchandise and submit tracking information to ensure that the buyer will receive the shipment.

The buyer will then establish a number of days for inspection or review and institute an option to accept or reject the delivered merchandise. The escrow will then pay the seller by the method selected and where transaction will be affirmed.

A finance calculator is a common resource made available by all lending institutions, banks, or financial companies. The term “financial calculator” is a broad term used to describe all devices that will evaluate and forecast the fundamentals and pertinent numbers aligned with a loan agreement, an individual’s particular finances, or a number of other financial agreements.

A financial calculator is offered to the general public to streamline an individual or entity’s financial state; the financial calculator will organize an individual’s payments as they coordinate to a specific financing plan or loan obligation.

Although a finance calculator can be used for an assortment of financial matters, the most common types of the device are used to organize and elucidate upon an individual’s mortgage, their refinancing plan (if applicable) or the monthly payments of a particular loan.

A finance calculator is a vital resource for many individuals (particularly those who take-out loans) because the device enables an individual to determine the monthly payments on a loan, as well as how each payment affects the principal and the interest portion of the particular loan.

Additionally, a finance calculator will evaluate the expected maturity date of the loan; such a feature enables the individual to appropriately balance their budget as it pertain to their loan obligation. Although these benefits could be realized through a manual approach, the finance calculator streamlines the delivery of such information.

In addition to borrowers, a finance calculator is also utilized by lenders of various industries. For instance, mortgage loan officers and other lending professionals who are responsible for approving or establishing loan offers will use a finance calculator to evaluate the prospective borrower’s ability to repay the loan.

To evaluate a borrower’s ability to repay a loan contract, the lender will enter the specifics of the loan (the maturity date, the attached interest, the amount financed, and the expected monthly payments) against the individual’s monthly income, expenses, occupation and their credit history. When this information is submitted into a finance calculator, the device will organize the individual’s expected ability to meet the loan obligations as it pertains to the prospective borrower’s monthly income and expenditures.

The finance calculator is a simple, yet highly-beneficial tool. Although there are a number of finance calculators, the typical device will ask for the specifics of the individual’s loan agreement (interest rate, term, amount financed etc.), and their monthly income. This basic information may fluctuate based on the type of finance calculator being used; however, these two categories are the primary inputs necessary for a finance calculator.

•    Car loan finance calculator

•    Mortgage Calculator

•    Refinancing Calculator

•    Basic Loan Calculator

•    Credit Cards and Debt Management Calculator

•    Investment Calculators

•    Retirement Savings and Planning Calculators

•    Personal Finance Calculators

•    Insurance Calculators

•    Savings Calculators

Financing refers to an avenue of credit or funds that are delivered to an individual or business owner to help fulfill various expenditures, loan obligations, or to pay for products and services needed to distribute a specific business model.

Many entrepreneurs, who are attempting to start a small business, will struggle with obtaining the capital needed to start a new business. Financing is the foundation for the small business; without the obtainment of capital, the business would fail in acquiring the funding necessary to implement its respective business model. That being said, there are numerous sources of finance that can be obtained to get a small business off the ground.

Financing is a type of loan; with all types of loans the applicant must meet the qualifications supplied by the underlying lending institution. As a result of this, the applicant must possess a good credit score, an ability to prove that the small business will earn a profit and a full list of all expenditures that the loan or credit line will be used towards.

Personal Savings: Although this is not a source of finance in theory, all experts will agree that the most efficient and best form of capital comes from an individual’s personal savings. Personal savings is highly liquid, does not require the fulfillment of a loan obligation, nor does it require the transfer of equity or ownership. Additionally, personal savings will demonstrate to prospective investors that the individual is willing to risk his own funds, does not possess exorbitant liabilities or a large exposure to credit, making his or her company stable even in tough economic times.

Borrowing money from friends and family: The second easiest source of finance comes from those closest to the entrepreneur. Borrowing money from friends or family will not require the delivery of paperwork (loan application) that a bank or lending institution mandates, nor will the loan be attached with predatory interest rates (for the most part). Additionally, the lenders will typically not require a decision-making process or partial ownership. That being said, a fundamental disadvantage to this source of finance is that if the business fails and the money is lost, the underlying relationship may be strained.

Credit Cards: The entrepreneur’s personal credit cards are an easy source of finance that can be used for smaller expenditures, such as the obtainment of relatively inexpensive business equipment. Although these items can be obtained with minor expenses, the main disadvantage tied-into this source of finance stems from the high interest rates that credit card companies will typically charge.

Banks:Financial institutions are the most common sources of finance. That being said, the typical bank—due to the credit crunch and the state of the modern economy—are conservative lenders. The majority of prospective business owners must understand that banks rarely make loans to start-ups unless there are outside assets pledged against the borrowing to make the loan secure.

Venture Investors: This source of finance is a major credit stream for small business owners. That being said, all venture investors will insist on retaining partial ownership of the new business that they are funding.

A formal institutional venture fund will be established as a limited partnership, where passive limited partners, will supply the majority of the funding.

Corporate venture funds are established corporations who provide capital to new ventures whom they deem as worthwhile investment types. Additionally, these venture companies will provide management and technical expertise to the small business. The downside to this source of finance is that the corporation venture will seek to gain control of the business and the delivery of the funds is often delayed.

The last type of venture investor is an angel investor, who is successful entrepreneurs themselves. The money is awarded in the form of investment where the angel investor will act as a business adviser to ensure that their investment is handled appropriately. Angel investors make smaller investments than the other forms of venture capitalists and possess fewer contracts in the baking community.

Government Grants and Programs: Numerous national and regional government programs will offer loans or grants to encourage the formation of small businesses. The Small Business Administration is the government agency who will guarantee these loans, which are made by private lenders, to individuals who would otherwise not qualify for a commercial loan.

A mutual fund is a professionally managed collective investment strategy that pools money from multiple investors for the mass-purchase of investment securities. Mutual funds–which are typically comprised of stocks, short-term money market instruments, bonds, commodities, other mutual funds, and other securities—are popular investment options due to their enhanced strategy and their ability to diversify risk through wide-spread investment of multiple industries and sectors.

A mutual fund is managed and run by a fund manager that trades (actively buys and sells) the fund’s investments in accordance to the fund’s overall investment strategy or objective.

In the United States, all mutual funds are registered with the Securities and Exchange Commission (SEC) under both the Internal Revenue Service (IRS) and SEC’s regulations. As a result of this adherence, all mutual funds that are formally created in the United States must distribute nearly all of its net realized gains and net income from the sale of their securities to its investors. The distribution of gains and income must be awarded to those individuals who invest in the fund (who deliver funds to the manager for the right to buy and sell securities) at least annually.

The majority of funds in the United States are overseen by a group of managers or by a board of directors. As a result of this structure, the board, along with the investment adviser and other service organizations, is primarily responsible for ensuring that the fund is managed appropriately and in accordance with the bylaws of the fund’s investment objective. Regardless of the fund’s organizational structure; however, all mutual funds must manage their investments based on the best interest of the fund’s investors.

Since the passage of the Investment Company Act of 1940 and the Investment Advisers Act of 1940, there have been three general types of registered investment companies in the United States of America: open-end funds (mutual funds), closed-end funds and unit investment trusts. Recently; however, this classical interpretation of an investment company has evolved to include novel types of investment strategies, such as exchange-traded funds and hedge funds.

Open-ended Funds

The term “open-ended fund” simply means that at the end of every trading day, the mutual fund will continually issue new shares to potential investors who will buy into the fund and must be ready to buy back shares from investors redeeming their shares at the present net asset value per share.

Mutual funds are structured as corporations or trusts, such as business trusts. Any corporation will be classified by the Securities and Exchange Commission as an investment company if the fund issues securities and predominantly invests in non-government securities. An investment fund will be classified as an open-investment company by the SEC if the fund does not issue undivided interests in specific securities and if it issues redeemable securities.

Mutual funds in the United States must use SEC form N-1A to report their average annual compounded rates of return for 1-year, 5-year and 10-year timeframes; the average annual compounded rates elucidate upon the average annual total return of the fund.

The following formula is used to calculate the average annual total return of a mutual fund: P (1+T)^n=ERV where P=a hypothetical initial payment; T=the average annual total return; and N=total number of years.

The fee structure associated with a mutual fund is divided into two or three components: non-management expenses, management fees, and the fees associated with 12b-1/non-12b-1 fees. All expenses associated with a mutual fund are expressed as a percentage of the average net assets of the fund.

Online stock trading is a form of self-direct investing that allows an individual investor to partake in the buying and selling of stocks or options through the use of an internet marketplace or platform.

As a result of the rapid-pace, low-commissions, minimal fees, and overall ease of access, online stock trading has become the norm for individual traders and investors. Due to this popularity, the majority of brokers no offer online services that contain unique trading platforms to expedite online stock trading.

Benefits of Online Stock Trading:

Before online stock trading was made available, investors had to call up their hired brokers and place their particular orders over the telephone. The broker would take the order and execute the trade by placing the order into their system, which was directly linked to the coordinating trading floors and exchanges. With the advent of the Internet; however, investors are now able to execute instant trades with other investors via electronic communication networks. Although some orders entered through the Internet are still routed through the broker, the process of online stock trading is exceptionally faster than the prior technique.

The majority of online stock trading must be approved by agents who monitor the trades. This fundamental step assists in the protection of both the brokerage firm and the client from unlawful or incorrect trades.

Prior to online stock trading the fees associated with executing a trade through a tangible broker was exorbitant. The majority of online brokers are referred to as discount brokers, because the same fees associated with physical brokers are exceptionally lower when executed online. The fees attached to online stock trading are lower due to the speed in which the trade is executed (exponentially more trades can be executed) and online stock trading does not deliver investing advice that is commonplace with a generic broker.

Risks Associated with Online Stock Trading

Before you choose to invest or take part in online stock trading, it is essential that you adequately research the online broker that is being utilized. You must assure that the online broker is licensed with the coordinating state or provincial jurisdiction in which the online stock trades are executed.

The Federal Government of the United States provides tips to avoid investment scams through the issuance of their On Guard Online website.

Potential investors must also understand the potential risk of investing without the aid of a licensed and trained Stock Broker or Investment Professional. These individuals are well-versed in trading and understand the compliance issues associated with investments. Forgoing this information and knowledge could prove costly. As a result of this, the majority of online stock trading companies or online brokers will offer a number of investment tools that may be utilized by individuals.

Once you have researched the aforementioned information, you must research the particular sectors and the coordinating business and financial statements of each company whose stock you plan on purchasing. This knowledge, along with a diversified investment strategy will assist in mitigating the risks associated with the volatility of the stock market and the general risks associated with online stock trading.

The OTC Bulletin Board is an electronic, interdealer quotation system that displays real-time quotes, volume information for over-the-counter equity securities (those securities not listed on the NASDAQ or a national securities exchange), and last-sale prices for many equity-securities in the United States.

The OTC Bulletin Board is a service delivered to broker-dealers who may subscribe to the system for a yearly fee. Once the service is acquired, a broker-dealer or financial institution can effectively look up prices or enter quotes for OTC securities.

The Financial Industry Regulatory Authority is the administrative and authoritative body responsible for running and overseeing the OTCBB. That being said, FINRA announced in September of 2009 that the agency would be selling the OTCBB. The sale was initiated because competitors—like the Pink OTC Markets who are rumored to purchase the OTCBB—are stripping the OTCBB of its listing powers. Prior to 2008, the OTCBB collected 100% of quotes, but this number has declined due to the rise in competition.

The OTCBB is not part of the NASDAQ stock exchange; however, all companies quoted or listed on the OTCBB must satisfy the filing and full reporting requirements of the SEC. Although regulations exist, the companies listed on the OTCBB possess no responsibility to report specifics associated with a market capitalization, a minimum share price, and corporate governance. That being said, companies may be “de-listed” from the OTCBB for falling below a minimum share price, a minimum capitalization or other requirements that end up being quoted on the OTCBB.

Those stocks not listed or quoted on the OTCBB (stock of non-reporting companies that do not possess current SEC filings) may be quoted in the Pink Sheets. The majority of companies listed on the OTCBB are dually quoted, meaning they are listed on both the OTCBB and the Pink Sheets.

The OTCBB is an electronic trading service offered by the National Association of Securities Dealers. Companies listed on the OTCBB are required to file current financial statements with either the SEC or a banking/insurance regulator.

Those stocks traded in OTC markets (such as the Pink Sheets or the OTCBB) typically possess minimal market capitalization.

Stocks traded and quoted on the OTCBB possess low trade volumes and are typically classified as microcaps or penny stocks. As a result of this classification, the majority of retail and institutional investors will avoid the stocks listed on the OTCBB due to the risks associated with share price manipulation and the greater potential for fraud.

Due to the aforementioned risks, the Securities and Exchange Commission commonly issues warnings to investors to be aware of manipulation and fraud schemes associated with the companies listed on the OTCBB. As a result of this investor skepticism, most companies will seek listing on more established marketplaces such as the NYSE, AMEX, or NASDAQ.

Global finance refers to the financial system consisting of regulators and various financial institutions that conduct their business on an international level. As a result of this definition, global finance does not constitute any financial businesses or regulators that act on a national or regional level.

The primary components of global finance are the enormous international institutions, such as the bank for International Settlements or the International monetary Fund, as well as various national agencies and government departments, such as various central banks, finance ministries, and those private companies who act on a global scale.

The International Monetary Fund is a financial institution that is responsible for maintaining the international balance of payments accounts of its member states. The International Monetary Fund may also act as a lender (typically in last resort situations) for state members who are in financial distress due to currency crises or struggles that revolve around meeting the balance of payment when debt default is present.

Membership in the International Monetary Fund is based on quota or the amount of funding a member state (country) provides to the fund. The evaluation of funding is based on a relative investigation of the member state’s role in the international trading system and global finance in general.

Another prominent member of global finance is the World Bank, which is an institution who aims to offer funding for development projects that, for the most part, reside in developing nations. The World Bank assumes the credit risk of these developing nations; the World Bank will provide financing to projects that otherwise would not be able to access such funding.

The World Trade Organization is another principle player aligned with global finance. The World Trade Organization is responsible for settling disputes and negotiating international trade agreements with various international companies, institutions or government agencies.

To be considered a participant in global finance a company or organization must possess international clients or conduct business transactions overseas. The following types of institutions also play a prominent role within global finance:

o    Commercial Banks

o    Insurance Companies

o    Sovereign Wealth Funds

o    Mutual Funds

o    Pension Funds

o    Private Equity Firms and Hedge Funds

The International Finance Corporation is a United Nations agency that directly invests in companies and guarantees loans to private investors in the global marketplace. The International Finance Corporation is affiliated with the World Bank and was created to promote a sustainable private sector through the investment in developing economies as a means to reduce poverty and improve the lives of those residing in struggling nations.

The funds delivered to such nations are typically used to benefit the nation as a whole. Through the delivery of funds, these developing economies can invest and subsequently supply their people with improved public services such as paved roads, public transportation, the establishment of business centers, and an overall improvement of the nation’s infrastructure.

The International Finance Corporation is headquartered in Washington D.C. and shares the primary responsibilities and objectives of all World Bank Group Institutions—to improve the overall quality of the lives of people in developing countries.

To help those in struggling nations, the International Finance Corporation provides micro loans as well as other forms of financing to developing countries. The International Finance Corporation was established in 1956, and stands alone as the world’s largest multilateral source of equity financing for private sector projects in developing economies worldwide.

The International Finance Corporation aims to promote sustainable development of the private sector in developing nations through the various means:

o    The International Finance Corporation will finance private sector projects and an assortment of business ventures in the developing world.

o    The International Finance Corporation will help private companies in developing nations in regards to mobilizing and gaining access to financing streams in the international financial markets.

o    The International Finance Corporation will provide technical assistance and professional advice to various businesses and government agencies throughout the world. 

The International Finance Corporation is comprised of 182 member countries who band together to collectively distribute the company’s unique policies. To gain membership, a country must first acquire membership to the International Bank for Reconstruction and Development. The International Finance Corporation shares capital, which is delivered by its member countries. The voting privileges of the member countries are proportional to the number of shares held—tied-into the amount invested.

The International Finance Corporation is comprised of a Board of Governors who delegates the majority of their powers to the IFC’s board of Directors. The IFC is also managed by the company’s CEO, President and Executive Vice President.
International Finance Corporation’s funding:

The International Finance Corporation’s equity and investment policy is funded out of the capital paid-into the corporation. Additionally, funds are obtained through the retained earnings, which is primarily comprised of the corporation’s net worth. The IFC possesses a strong shareholder support, triple-A bond ratings, as well as a substantial capital base, which allows the company to raise funds in all international markets.