Securities Act of 1934

Securities Act of 1934 Student’s Name Institution Securities Act of 1934 The Securities Act of 1934 was a law devised to cater for trading in the secondary market for bonds and stock financial instruments. The law was a response to the Wall Street Crash of 1929. The crash was attributed to the lack of transparency in the securities market. The Act helped to establish the Securities and Exchange Commission (SEC). It gave the Commission broad powers in dealing with secondary financial instruments in the securities market. For instance, the SEC had the sole responsibility for registering and supervising transfer agents and brokerage firms (Investopedia, 2017). The Act also prohibits the misrepresentation of securities transactions and any form of fraud regarding the same. The Act makes it punishable for any individual found manipulating the stock prices by spreading false information concerning the related company (Seitzinger, 2016). The Act has various provisions, including Fraud and Insider Trading, Tender Offers, Broker registration and Corporate reporting. The Fraud and Insider Trading section enumerates the regulation of insider trading and its illegality or legality. Legal insider trading occurs when corporate administrators and staff engage in the trade of their own company’s stock. The SEC allows this form of trading by requiring that the employees and management report these transactions. On the other hand, illegal insider trading happens when individuals buy and sell securities in breach of their fiduciary duty and relying on information that is not public. For instance, a trader getting confidential information concerning a potential merger and using such information to trade is liable (SEC Society, 2017). After enactment of the Act in 1934, the SEC joined the discussion concerning insider trading. However, since the law did not have an explicit definition of insider trading the SEC only regulated it tentatively and in overly specific manner. Over the next years, the SEC provided guidelines that ensured that all those involved in a market transaction had equal access to financial data. The law’s main aim was to...