Covered Security

In US law, a covered security may refer to two categories of securities:

  • Under The National Securities Markets Improvement Act of 1996, is a security listed on the NYSE, AMEX, Midwest (Chicago), or NASDAQ Global Market or any security senior to (bond or preferred) or equal to (rights and warrants). These securities are exempt from registration and advertising filing requirements of the Uniform Securities Act but are not exempt from any anti-fraud provisions.
  • In US tax law, a covered security is one which, on sale, the broker must report to the IRS the customer's basis and whether the sale is short-term or long-term. This applies to certain types of securities, acquired after a specified effective date – the law phases in between January 1, 2011 and January 1, 2013 (or later).

This category was created in Section 403 of the Energy Improvement and Extension Act of 2008 (Public Law 110-343, division B), where it is referred to as "specified securities", and includes stock in a corporation, notes, bonds, debentures and other evidence of indebtedness, commodities, commodity contracts or derivatives, and any other financial instrument for which the Secretary of the Treasury determines reporting adjusted basis is appropriate. Information is reportable if the security is acquired after a certain effective date; this is January 1, 2011 for stock in a corporation (except acquired via mutual funds or DRIPs, in which case January 1, 2012), January 1, 2013 for other securities, or later if determined by the Secretary of the Treasury. Securities acquired before 2011 are not covered.

Famous quotes containing the words covered and/or security:

    “They say the seeds of what we will do are in all of us, but it always seemed to me that in those who make jokes in life the seeds are covered with better soil and with a higher grade of manure.”
    —Ernest Hemingway (1899–1961)

    “Is a Bill of Rights a security for [religious liberty]? If there were but one sect in America, a Bill of Rights would be a small protection for liberty.... Freedom derives from a multiplicity of sects, which pervade America, and which is the best and only security for religious liberty in any society. For where there is such a variety of sects, there cannot be a majority of any one sect to oppress and persecute the rest.”
    —James Madison (1751–1836)