The index includes many of the initial public offerings (IPOs) of recent years and is considered the benchmark index for small-cap investments.
Russell 3000 Index
The Russell 3000 Index, a market capitalization weighted index published by the Frank Russell Company, tracks the 3,000 largest companies in the United States. Its subsets, the Russell 1000 and the Russell 2000, are widely used benchmarks of the US large-cap and small-cap markets.
Russell 3000 Index
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Safekeeping
Safekeeping occurs when a broker-dealer holds securities that are registered in a client’s name for the client.
The advantage from the client’s perspective is that the securities are safe and the broker-dealer has them available to sell at the client’s instruction.
The disadvantage from the broker- dealer’s perspective is that securities held in a client’s name are not fully negotiable or fungible, so they can’t be used to settle trades, for example. Thus, it’s a service for which many firms charge a fee.
Instead of being registered in their own names, clients’ securities may be registered in the broker-dealer’s name or in the name of a depository. That’s known as being registered in street name or nominee name.
With this type of registration, the client’s ownership rights are fully protected but the stock is fungible. The broker-dealer may use a limited portion of the holding to settle trades or for other purposes.
Salary reduction plan
A salary reduction plan is a type of employer-sponsored retirement savings plan. Typical examples are traditional 401(k)s, 403(b)s, 457s, and SIMPLE IRAs.
A salary reduction plan allows you, as an employee, to contribute some of your current income to a retirement account in your name and to accumulate tax-deferred earnings on those contribu- tions. In most plans, you contribute pretax income, which reduces your current income tax, and you pay tax at withdrawal at your regular rate.
Your employer may match some of or all your contribution according to a formula that applies on an equal basis to all participating employees. All salary reduction plans have an annual contribution cap that’s set by Congress and allow annual catch-up contributions for participants 50 and older.
With Roth 401(k) and similar plans, you contribute after-tax income but qualify for tax-free withdrawals if you are older than 59½ and your account has been open at least five years.
Sale-leaseback
In a sale-leaseback arrangement—also known as a leaseback—an owner sells his or her property, and then immediately leases it back from the buyer as part of the same transaction.
This way, the seller gets the profits from the sale while keeping possession and use of the property, while the buyer is assured immediate long-term income on the property.
Sale-leaseback transactions are most commonly used in commercial real estate, but can also apply to commercial vehicles and other types of property.
Sales charge
A sales charge is the fee you pay to buy shares of a load mutual fund or other investment purchased through a financial professional.
The charge is typically figured as a percentage of the amount you invest. As the size of your investment increases, the rate at which you pay the sales charge may decrease.
Each dollar amount at which there is a corresponding reduction in the charge is known as a breakpoint. For example, the
Safekeeping
rate may drop from 4.5% to 4.25% with an investment of $25,000.
The sales charge on a mutual fund may be imposed as a front-end load when you buy (also known as Class A shares), as a back-end load when you sell (also known as Class B shares), or as a level load each year you own the fund (also known as Class C shares).
Sales tax
A sales tax is a tax imposed by state and local governments on transactions that occur within their jurisdictions.
The taxing authority determines which transactions are subject to tax and the flat rate at which the tax is calculated. Some countries, though not the United States, impose a national sales tax often called a value added tax (VAT).
Sallie Mae
This corporation purchases student loans from various lenders, such as banks, and packages the loans as bonds or short-term or medium-term notes. After issue, these debt securities trade on the secondary market.
Sallie Mae guarantees repayment of the bonds and notes, and uses the money it raises through the sale of these securi- ties to provide additional loan money for post-secondary school students. Sallie Mae also arranges financing for state student loan agencies. Its shares trade on the New York Stock Exchange (NYSE).
Sarbanes-Oxley Act of 2002
Named after its main Congressional sponsors, Senator Paul Sarbanes and Representative Michael Oxley, the Sarbanes-Oxley Act of 2002 introduced new financial practices and reporting requirements, including executive certification of financial reports, plus more stringent corporate governance procedures for publicly traded US companies . It also added protections for whistleblowers.
Officially the Corporate and Auditing Accountability, Responsibility, and Transparency Act, the law is known more colloquially as SarbOx or SOX. It was passed in response to several high- profile corporate scandals involving accounting fraud and corruption in major US corporations.
The law also created the Public Company Accounting Oversight Board (PCAOB), a private-sector, nonprofit corporation that regulates and oversees public accounting firms.
The law has seen its share of contro- versy, with opponents arguing that the expense and effort involved in complying with the law reduce shareholder value, and proponents arguing that increased corporate responsibility and transparency far outweigh the costs of compliance.
Savings account
A savings account is a deposit account in a bank or credit union that pays interest on your balance—though some institu- tions require that you have at least a minimum amount in the account to qualify for earnings.
You can deposit and withdraw from savings accounts as you wish, but you can’t transfer money from the account directly to other people or organizations.
While savings accounts typically pay interest at a lower rate than other bank accounts, that may not always be the case. Savings accounts are insured by the Federal Deposit Insurance Corporation (FDIC) or the National Credit Union Share Insurance Fund.
You’re covered up to $100,000 in each of three different categories of account in a single bank, or up to $250,000 if an account is a self-directed retirement account (IRA). Different branches of the same bank count as one bank.