securities


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securities,

in finance, instruments giving to their legal holders rights to money or other property. Securities include stocks, bonds, notes, mortgages, bills of lading, and bills of exchange. See speculationspeculation,
practice of engaging in business in order to make quick profits from fluctuations in prices, as opposed to the practice of investing in a productive enterprise in order to share in its earnings.
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 and stock exchangestock exchange,
organized market for the trading of stocks and bonds (see bond; stock). Such markets were originally open to all, but at present only members of the owning association may buy and sell directly.
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Securities

 

documents indicating a right of ownership (such as stocks, bonds, letters of credit, bills of exchange, checks, and bills of lading) that may only be redeemed upon their presentation. The various categories of securities are (1) securities made out in the name of a specific person, (2) securities made out in the name of the first purchaser and “at his order” (meaning that the person indicated thereon is entitled to transfer the securities by endorsement), and (3) securities that are payable to the bearer and do not indicate in whose name they were issued.

The loss of securities usually means loss of the right to redemption expressed therein. In some instances, however, measures are indicated to protect the rightful owner. Thus a procedure is established in Soviet legislation by means of which the rights of the bearer may be restored upon loss of a savings book.

In capitalist society the principal types of securities are stocks and bonds issued by capitalist enterprises and state loan bonds. Mortgage deeds issued by mortgage banks on land, houses, and other immovable property are a special kind of bond. Securities may represent a capital share in an enterprise or may be evidence of money lent out, and they may confer the right to a regular income in the form of dividends or interest.

The issuance of securities is one of the most important operations of finance capital; it is used by monopolies to extract maximum profits—for example, the huge amounts of founders’ profits obtained from the issuance of securities of newly organized stock companies. Since securities yield an income to their owners, they are bought and sold at specified prices on the stock exchange.

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Identifying controls placed in operation by a service organization that provides services to an entity that are part of the entity's information system for derivatives and securities, which may require that the auditor have an understanding of the operating characteristics of entities in a certain industry.
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We are not convinced that a compelling case has been made at this time for legislative action that does not thoroughly address the basic framework that governs the securities activities of banks.
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