The Laws That Govern the Securities Industry

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The Laws That Govern the Securities Industry

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The Securities Exchange Act requires disclosure of important information by anyone seeking to acquire more than 5 percent of a company's securities by direct purchase or tender offer. Such an offer often is extended in an effort to gain control of the company. As with the proxy rules, this allows shareholders to make informed decisions on these critical corporate events

Certain securities are exempted from the securities registration process. The exempted transactions include private offerings to a limited number of persons or institutions; offerings of limited size; intrastate offerings; securities of municipal, state, and federal governments

Securities Exchange Act created Securities and Exchange Commission (SEC) to regulate and discipline all aspects of the securities industry -register, regulate, oversee market participants, require periodic reporting information, discipline market participants and lead investigations into potential violations of the act

Securities Exchange Act requires to disclose all relevant information before voting solicitation to ensure shareholders make informed voting decision

Securities Exchange Act requires companies with more than 10$ million in assets whose securities are held by more than 500 owners to file annual and quarterly financial reports, disclose major events that are relevant to investors. These reports are public through SEC EDGAR database

Objective of Securities Act of 1933 is to provide investors financial and other significant information concerning securities being offered for public sale (primary market)

Securities Exchange Act broadly prohibits fraudulent activities of any kind in connection with the offer, purchase, or sale of securities. These provisions are the basis for many types of disciplinary actions, including actions against insider trading

Objective of Securities Act of 1933 is to prohibit deceit, misrepresentation, and other fraud in the sale of securities (in primary market)

Securities Exchange Act requires to disclose all importan information in advance before soliciting shareholders' votes

Securities Exchange Act requires market participants to register with the Commission, including exchanges, brokers and dealers, transfer agents, and clearing agencies. Registration for these organizations involves filing disclosure documents that are updated on a regular basis

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With this Act, Congress created the Securities and Exchange Commission. The Act empowers the SEC with broad authority over all aspects of the securities industry. This includes the power to register, regulate, and oversee brokerage firms, transfer agents, and clearing agencies as well as the nation's securities self regulatory organizations (SROs). The various securities exchanges, such as the New York Stock Exchange, the NASDAQ Stock Market, and the Chicago Board of Options are SROs. The Financial Industry Regulatory Authority (FINRA) is also an SRO. The Act also identifies and prohibits certain types of conduct in the markets and provides the Commission with disciplinary powers over regulated entities and persons associated with them. The Act also empowers the SEC to require periodic reporting of information by companies with publicly traded securities.

The Securities Exchange Act requires disclosure of important information by anyone seeking to acquire more than 5 percent of a company's securities by direct purchase or tender offer. Such an offer often is extended in an effort to gain control of the company. As with the proxy rules, this allows shareholders to make informed decisions on these critical corporate events

The Securities Exchange Act also governs the disclosure in materials used to solicit shareholders' votes in annual or special meetings held for the election of directors and the approval of other corporate action. This information, contained in proxy materials, must be filed with the Commission in advance of any solicitation to ensure compliance with the disclosure rules. Solicitations, whether by management or shareholder groups, must disclose all important facts concerning the issues on which holders are asked to vote.

The Act requires a variety of market participants to register with the Commission, including exchanges, brokers and dealers, transfer agents, and clearing agencies. Registration for these organizations involves filing disclosure documents that are updated on a regular basis

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.

Companies with more than $10 million in assets whose securities are held by more than 500 owners must file annual and other periodic reports. These reports are available to the public through the SEC's EDGAR database

The Securities Exchange Act also governs the disclosure in materials used to solicit shareholders' votes in annual or special meetings held for the election of directors and the approval of other corporate action. This information, contained in proxy materials, must be filed with the Commission in advance of any solicitation to ensure compliance with the disclosure rules. Solicitations, whether by management or shareholder groups, must disclose all important facts concerning the issues on which holders are asked to vote.

The securities laws broadly prohibit fraudulent activities of any kind in connection with the offer, purchase, or sale of securities. These provisions are the basis for many types of disciplinary actions, including actions against fraudulent insider trading. Insider trading is illegal when a person trades a security while in possession of material nonpublic information in violation of a duty to withhold the information or refrain from trading

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.

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https://www.investor.gov/introduction-investing/investing-basics/role-sec/laws-govern-securities-industry

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