1933 Securities Act

The 1933 Securities Act Name Institution The 1933 Securities Act The 1933 Securities Act was established in 1933 due to the stock market crash that occurred in 1929. The 1933 securities act had two major objectives: to bar deceit, misrepresentations and other forms of fraudulence in the sale of shares, and to ensure that investors receive necessary critical information including financial information regarding the securities offered by firms for public sale (U.S. SEC, 2013). The law targeted issuers of securities. The Securities Act requires disclosure of information by issuers through a mandatory registration process in the sale of such securities. The Securities Act of 1933 is, however, mainly used in primary market offerings (U.S. SEC, 2013). This is applicable as various exemptions are applicable on secondary market trading. Under the Act, all non-exempt securities are expected to be registered with the Securities and Exchange Commission (SEC), with section 5 regulating not only the timeline but also the distribution process to be used by issuers in offering securities for sale. Section 6 of the Act elaborates the registration process (Sarkar, n. d). The actions of the Securities and Exchange Commission (SEC) are the main means through which federal securities laws are enforced. It was the first federal legislation that regulated the stock market, taking power from the states and placing it under federal government control (Sarkar, n. d). Another key aspect of the Act was its creation of a uniform set of rules that guaranteed investors of protection from fraudulent activities in the sale of securities. The Act was signed into law in 1933 by President Franklin Roosevelt, at a time when he was enacting the "New Deal" laws. Several amendments were made to the Act, the latest amendment occurring in 2012 but its key objectives remain unchanged (Sarkar, n. d). Among the crucial aspects of the 1933 Securities Act are Section 11 which holds issuers responsible for registration statement that are untrue or misleading; section 13 touching on limitations of actions; section 2 which prescribes penalties to be imposed; section 20 on injunctions and the prosecution of events; sections 5 and 12 (a) (1) which provides for the purchaser to sue sellers with regard to offering and selling, without registering, securities that are non-exempt (Sarkar, n. d). As an anti-fraud provision within the Act, Section 17 (1) has great significance in combating fraud. Section 15 further guards the investors' interests by holding "control persons" liable under Sections 11 and 12 through the ownership of stock thus enabling investors to collect their money from insolvent defendants (Sarkar, n. d). The Section 3 of the 1933 Securities Act touches on the securities that are exempt from registration. The Act exempts some specified securities from the registration requirements. The exemp...