General Questions:

​

What is a REIT?

​

A real estate investment trust, or REIT, is a corporation, trust or association that owns (and might also manage) income-producing real estate. REITs pool the capital of numerous investors to purchase a portfolio of properties—from office buildings and shopping centers to hotels and apartments, even timber-producing land—which the typical investor might not otherwise be able to purchase individually.

​

REITs can offer tax advantages. For instance, qualified REITs that meet Internal Revenue Service requirements can deduct distributions paid to shareholders from corporate taxable income, avoiding double taxation. The REIT must also distribute at least 90 percent of its taxable income to shareholders annually. These distributions are taxable to the extent of any ordinary income and capital gains included in the distribution.

​

There are two types of public REITS: those that trade on a national securities exchange and those that do not. REITs in this latter category are generally referred to as publicly registered non-exchange traded, or simply non-traded REITS.

​

What is restricted stock?

​

Stock issued directly from a company that is not fully saleable until certain conditions have been met. Upon satisfaction of those conditions, the stock becomes saleable by the person holding the security.

​

What is Rule 144?

​

When you acquire restricted securities or hold control securities, you must find an exemption from the SEC’s registration requirements to sell them in the marketplace. Rule 144 allows public resale of restricted and control securities if a number of conditions are met.

​

What is a 10b5-1 Selling Plan? 

​

Sec Rule 10b5-1 allows officers and directors the flexibility to sell stock at all times, not just during open trading windows.  Often executives are hampered by blackout periods and other types of insider trading regulations.

​

What is a Registration Statement?

​

A set of documents that discloses important financial information regarding the registration of securities, including a prospectus, which is filed the SEC so the shares can be sold under certain conditions in the public markets.

​

What is a PIPE, IPO, private placement or secondary offering?

​

A PIPE, also known as a Private Investment in Public Equity, is a way for companies to raise capital in the public markets in timely and most cost efficient manner.  An IPO, also known as an initial public offering, is the first time a company issues shares to go public.  A private placement is an offering of securities that are not registered with the SEC.  A secondary offering is the issuance of shares from a company that has already done its initial public offering (IPO).

​

What are options?

​

An option is a contract written by a seller that gives the buyer the right, but not the obligation to buy or sell a particular security over a specific amount of time.

​

What is a dividend?

​

Are payments made by companies to it shareholders from the profits of their business.

​

What is an ex-dividend and record date?

​

The ex-dividend date is the day on which all shares bought or sold no longer have the right to pay a shareholder the most recently declared dividend.  The record date is the day shareholders properly registered to receive their dividend.  Shareholders who do not register as of this date will not receive the dividend.

​

What are fixed income securities?

​

Securities that yield a regular or fixed return. Bonds, preferred stock and government issued instruments are all types of fixed income securities.

​

What is the major differences between common and preferred stock?

​

Preferred stockholders have greater claim to the company’s assets and earnings than common shareholders.  Second, the preferred stockholders dividends are generally different and greater than the common shareholders.

​

What is an Accredited Investor?

​

Accredited investors are persons who, due to their income and/or net worth, are deemed to have a level of financial sophistication such that they require a lesser level of protection under the federal securities laws. With regard to individuals, a person shall be deemed to be accredited if they meet at least one of the following categories:

​

Any director, executive officer, or general partner of the issuer of the securities being offered or sold, or any director, executive officer, or general partner of a general partner of that issuer;

Any natural person whose individual net worth, or joint net worth with that person’s spouse, at the time of his purchase exceeds $1,000,000, exclusive of residence; or

​

Any natural person who had an individual income in excess of $200,000 in each of the two most recent years or joint income with that person’s spouse in excess of $300,000 in each of those years and has a reasonable expectation of reaching the same income level in the current year.

​

What is The JOBS Act?

​

Written with the intent to encourage funding of small businesses during the initial public offering process, the Jumpstart our Business Startups Act (the “JOBS Act”), as signed by President Obama on April 5, 2012, reduces the regulatory burden on small companies seeking to raise capital in the U.S. through revisions to the Securities Act of 1933 (the “Securities Act”) and the Securities Exchange Act of 1934 (the “Exchange Act”). As a result, smaller issuers can now take advantage of improved opportunity for public financing and development during their initial years as a public company.  Private companies also benefit from the JOBS Act as a result of several changes to the Securities Act, including the ability to generally solicit and advertise in connection with private placements of securities.

​

What is Suitability?

​

Suitability is the determination that a particular investment strategy meets the objectives and means of an investor. It goes beyond just the financial resources of an investor to participate as an accredited investor in, for example, a private placement, but also encompasses the appropriate knowledge and understanding of risk. Investing in the stock market is speculative and investors should understand the risks associated with the investment and what is suitable for their investment objectives. Before making any investment in a Cambria Capital placed offering, an investor needs to establish his or her investment profile and to consider, for each investment, the product or strategy’s investment objectives, characteristics, liquidity risks and potential benefits, volatility and likely performance in a variety of market and economic conditions.

​

What are the risks of trading and investing?

​

All securities trading, whether in stocks, options, or other investment vehicles, is speculative in nature and involves substantial risk of loss.

​

Cambria Capital encourages its Customers to invest carefully and to use the information available at the websites of the SEC at http://www.sec.gov and FINRA at http://FINRA.org

​

Customers can review public companies’ filings at the SEC’s EDGAR page. FINRA has published information on how to invest carefully at its website. Cambria Capital believes it is very important that every Customer understands all of the risks of any form of trading or investing prior to trading or investing real dollars. Past performance is not necessarily indicative of future results. By investing their money in securities through Cambria Capital, Customers are taking full responsibility for all trading actions, and should make every effort to understand the risks involved including suitability. For additional information on suitability, please review the Suitability FAQ section.

​

What is SIPC or Supplemental Insurance?

​

Member of SIPC, which protects securities customers of its members up to $500,000 (including $200,000 for claims for cash). Explanatory brochure is available upon request or at www.sipc.org.

​

Cambria Capital, LLC clears its brokerage business through Folio Investments and Axos Clearing. In addition to SIPC coverage, our clearing firm, Folio Investments, has also purchased from certain underwriters at Lloyds supplemental customer securities insurance with a total aggregate limit of $50 million. This coverage is limited to a combined return of $10 million to any customer from SIPC and certain underwriters at Lloyds. Axos maintains an insurance policy through Lloyd’s of London, which provides account coverage up to $24.5 million (including up to $900,000 in cash) per client as defined by SIPC rules. In short, combining the SIPC and Axos’ Lloyd’s of London coverage results in account protection up to a total of $25 million per client (as defined by SIPC rules) including up to $1 million for cash balances. Neither SIPC nor the insurance coverage protect against losses resulting from a decline in the market value of securities.

​

What is the difference between Reg D 506(b) and Reg D 506(c)?

​

Rule 506(c) is a new exemption that originated from the JOBS Act that allows general solicitation and general advertising in connection with private placements of securities. Rule 506(b) is the exemption that companies have used for decades to raise capital from pre existing relationships without the use of any advertising or general solicitation. Companies can now choose between 506(b) or 506(c). The main difference with 506(c) is the higher standard for ensuring that every investor is accredited. For both 506(b) and 506(c), you should have a “reasonable belief” that an investor is accredited before accepting their investment. With 506(b), founders often take the investors own word, and take relatively few steps toward verifying it. That standard isn’t good enough for 506(c); you must also take “reasonable steps” to verify that your investors are accredited which include review of financial statements, tax returns or professional letters from lawyers, CPAs, registered investment advisers or brokers. If the rules of 506 (c) are not properly followed, the violation can lead to a one year hold on your fundraising efforts and a return of capital to investors.

​

For more, visit www.sec.gov/info/smallbus/secg/general-solicitation-small-entity-compliance-guide.htm