GSB Check Bond, also known as GSB Orally Stopped Bond, is a relatively new type of regulated secondary insurance. As its name implies, it is issued by major stockbrokers and banks and is required by law to be sold to investors. It is different from most secondary insurance in that it does not need to be filed with the SEC (Securities Exchange Commission). Its main function is to protect investors by paying out if an investment goes bankrupt.
G SB’s main purpose is to provide protection for the financial interests of the primary underwriters. The primary underwriter’s job is to underwrite a stock for the companies it represents. In many ways, this protects the primary from incurring the same risks that it would if it allowed the secondary to invest in the unregistered securities that it deals with. Therefore, this type of secondary market is designed to help minimize risk, both for the primary and the secondary.
In order to sell these types of securities to investors, a stockbroker has to register with the National Association of Securities Dealers (NASD) and complete an NACD’s application. This information is then sent to all stockbrokers on the NACD’s list and the applications are then processed. Only then will the broker be allowed to place bets on publicly traded stocks.
A GSB check bond allows an investor to trade in the secondary market without having to disclose their entire financial portfolio. Because many people do not have full confidence in the stock markets, these types of securities are often a great way to bet on the trend of a particular company while remaining confident in the overall portfolio. Many stockbrokers will ask potential investors to complete a similar GSB application when they are considering placing a bet on a particular company. These secondary market investment options allow people to buy shares of stock that have already begun to rise in value without having to worry about the possible losses that could be incurred should the market decline.
The process of placing a GSB check bond is a fairly simple one. All stockbrokers will ask for a set of four business cards – one from the principal investment company (the company that actually pays the dividends), one from the secondary investment company (the company that makes the trades on behalf of the principal), and one from the principal himself. The stockbroker will also require the full name, address, date of birth, Social Security number, and date of expected retirement. After all of this information is collected, the stockbroker can place the purchase order and begin the process of buying and selling shares of the underlying stock.
GSB certificates are popular with individual investors as well as institutional investment groups. Many companies that offer this type of investment offer the option of paying a commission to the stockbroker that buys and sells these types of certificates. They can also choose to pay a set amount of money upfront for the certificate and guarantee the payment of dividends to the holder. This is known as a “100% reserve fund”. Some GSB certificates contain a clause that allows the investment firm or individual to purchase additional shares as soon as there is an increase in the value of the underlying shares.
