Securities Act of 1933 (redirected from Securities Act)

Securities Act of 1933

A federal piece of legislation enacted as a result of the market crash of 1929. The legislation had two main goals: (1) to ensure more transparency in financial statements so investors can make informed decisions about investments, and (2) to establish laws against misrepresentation and fraudulent activities in the securities markets.

Notes:

The Securities Act of 1933 was the first major piece of federal legislation regarding the sale of securities. Prior to this legislation the sale of securities was primarily governed by state laws however, the market crash of 1929 raised some serious questions about the effectiveness of how the markets were being governed. Because of the turmoil surrounding the investing community at this time, the federal government had to bring back stability and investor confidence in the overall system.

In general, the legislation was enacted as the need for more information within and about the securities markets was acknowledged. The legislation addressed the need for better disclosure by requiring companies to register with the SEC. Registration ensures companies provide the SEC and potential investors with all relevant information by means of the prospectus and registration statement.

See also: Black Thursday, Kondratiev Wave, Prospectus, SEC, Security, Shareholder

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Securities Act of 1933

First law designed to regulate securities markets, requiring registration of securities and disclosure.

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Securities Act of 1933

A landmark securities law intended to improve the flow of information to potential investors in new security issues and to prohibit certain selling practices relating to those issues. Issuing firms are required to register their securities with the federal government, and investment bankers must provide investors with a prospectus. Secondary issues, private offerings, and certain small issues are usually exempted from requirements of the Act.