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The Laws That Govern the Securities Industry

Securities Act of 1933

Often referred to as the "truth in securities" law, the Securities Act of 1933 has two basic objectives:

• require that investors receive financial and other significant information concerning securities being offered for public sale; and

• prohibit deceit, misrepresentations, and other fraud in the sale of securities.

The full text of this Act is available at: http://www.sec.gov/about/laws/sa33.pdf.

Purpose of Registration

A primary means of accomplishing these goals is the disclosure of important financial information through the registration of securities. This information enables investors, not the government, to make informed judgments about whether to purchase a company's securities. While the SEC requires that the information provided be accurate, it does not guarantee it. Investors who purchase securities and suffer losses have important recovery rights if they can prove that there was incomplete or inaccurate disclosure of important information.

The Registration Process

In general, securities sold in the U.S. must be registered. The registration forms companies file provide essential facts while minimizing the burden and expense of complying with the law. In general, registration forms call for:

• a description of the company's properties and business;

• a description of the security to be offered for sale;

• information about the management of the company; and

• financial statements certified by independent accountants.

Registration statements and prospectuses become public shortly after filing with the SEC. If filed by U.S. domestic companies, the statements are available on the EDGAR database accessible at www.sec.gov. Registration statements are subject to examination for compliance with disclosure requirements.

Not all offerings of securities must be registered with the Commission. Some exemptions from the registration requirement include:

• private offerings to a limited number of persons or institutions;

• offerings of limited size;

• intrastate offerings; and

• securities of municipal, state, and federal governments.

By exempting many small offerings from the registration process, the SEC seeks to foster capital formation by lowering the cost of offering securities to the public.

Securities Exchange Act of 1934http://www.sec.gov/about/laws/sea34.pdf.

Public Utility Holding Company Act of 1935Federal Energy Regulatory Commission.

Trust Indenture Act of 1939http://www.sec.gov/about/laws/tia39.pdf. 

Investment Company Act of 1940http://www.sec.gov/about/laws/ica40.pdf.

Investment Advisers Act of 1940http://www.sec.gov/about/laws/iaa40.pdf.

Sarbanes-Oxley Act of 2002http://www.sec.gov/about/laws/soa2002.pdf.   You can find links to all Commission rulemaking and reports issued under the Sarbanes-Oxley Act at:  http://www.sec.gov/spotlight/sarbanes-oxley.htm.

Source: Securities and Exchange Commission

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