Securities Act of 1933
The U.S. Securities Act of 1933, also known as the "Truth in Securities Act" or the "Federal Securities Act", 48 Stat. 82 (May 27, 1933), codified at et seq., 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.
Part of the New Deal, it was signed into law by President Franklin D. Roosevelt.
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Purpose of registration
The Securities Act of 1933, coming on the heels of the stock market crash of 1929 and the ensuing great depression, aimed to increase the public trust in American markets. It accomplishes this goal through disclosure of important financial information in the registration statement, and in the prospectus. The information in the prospectus enables investors to make informed judgments about whether to purchase a company's securities.
Registration process
In general, securities sold in the U.S. must be registered. The registration forms companies file provide essential facts about the securities and the company issuing them. 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.
All companies, both domestic and foreign, must file their registration statements electronically. These statements and the accompanying prospectuses become public shortly after filing, and investors can access them using EDGAR. Registration statements are subject to examination for compliance with disclosure requirements.
Not all offerings of securities must be registered with the U.S. Securities and Exchange Commission ("SEC"). 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.
See also
External links
Categories
1933 in law | Financial regulation in the United States | New Deal | Securities and Exchange Commission | United States federal financial legislation | United States securities law