ShmoopTube

00:00

finance a la shmoop what is the trust indenture Act of 1939 the same writer

00:09

who misread that moral obligation bond messed this one up as well [Dentures are put into a glass]

00:14

sorry 1-800 Fixodent so arguably the most boring act of all time even more [Elderly woman on the phone]

00:19

boring than the third act of Henry the fourth part 2 a total snoozefest the [People in the crowd falling asleep]

00:23

trust indenture Act basically extended the set of laws trying to make financial

00:28

dealings more fair and square for the little guy the average Joe the Joneses [The Jones family stood in front of their house]

00:32

specifically this act focuses on trusts ie legal entities set up to manage and

00:38

allocate money in the event that life you know changes you die you have kids

00:42

you get married you get divorce you turn into a zombie you know all those so the [Pictures of all the life events]

00:45

TI a does a couple of things first there's the indenture part and indenture [Picture of a multitool]

00:50

is a written agreement a legal contract more or less the Act made it illegal for

00:56

bonds of five million bucks or more to be offered without one of these [Indenture being stapled to an act]

01:00

protective docs and it had to disclose everything up front so an unwitting bond

01:05

holder wouldn't suddenly be shocked to discover that their bonds cease to hold

01:09

value after the third waning moon following the winter solstice or [The moon is covered by darkness]

01:13

whatever other clever catches the slimy issuer decided to throw in there and yes [Small print is highlighted]

01:17

believe it or not before this act you could actually borrow money on a [People shaking hands]

01:21

handshake and in theory that was legal there was the requirement that there was

01:24

paperwork behind it yeah go figure all right remember it's called the trust

01:28

indenture Act we covered indenture and covered Act cuz it does something well

01:32

the trust part what about that well the Act also made it a requirement for there

01:37

to be a trustee appointed any time a bond is issued someone whose job it was

01:42

to make semiannual disclosures of any relevant info related to the bond mainly [Woman in an office holding a disclosure]

01:47

its credit worthiness or if there were any red flags needed that it might not [Credit rating gauge]

01:50

pay back its interest in principal on time so yeah by putting in these [Woman waving a red flag]

01:54

safeguards I'm putting him in place a little guy wouldn't get stepped on in [The Jones family is crushed by a giant foot]

01:58

theory thank you trust indenture Act of [The dentures are taken out the glass]

Full Transcript