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Securities Act of 1933
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The Securities Act is a federal law passed in 1933. According to the Securities and Exchange Commission, the Securities Act of 1933 was the first major federal legislation to regulate securities. The act required companies to register with the Securities and Exchange Commission. Prior to the passage of the act, securities regulation was primarily the province of the states. The Securities Act shifted this regulatory authority to the federal government. It did not, however, prohibit states from enacting stricter regulations.[1][2]
Legislative history
On March 29, 1933, President Franklin D. Roosevelt (D) recommended the passage of federal legislation regulating securities. Roosevelt requested that former Federal Trade Commission Chairman Huston Thompson draft a bill. This bill did not gain approval from the Commerce Committee in the United States House of Representatives; the committee chair requested a rewrite. Roosevelt requested new writers for the bill. The second draft underwent four revisions before being submitted to the United States House of Representatives. The act passed both the House and the United States Senate without a record vote and was signed into law by Roosevelt on May 27, 1933.[3]
Provisions
According to the Securities and Exchange Commission (SEC), the Securities Act had two objectives: to "require that investors receive financial and other significant information concerning securities being offered for public sale," and to "prohibit deceit, misrepresentations, and other fraud in the sale of securities."[1]
In general, the law required that sales of securities be registered with the SEC. In registering with the SEC, the seller of a security must disclose his or her properties and businesses, a description of the security being sold, information about management running the company, and financial statements by independent accountants regarding the company.[1]
The act included various exceptions to the registration requirement (for example, securities sold by governments were exempted from registration requirements). Rule 144, a section of the act, permitted certain resales of securities without registration. Generally, this exception applied if the amount of securities sold in a three-month period did not exceed 1 percent of the outstanding stock, the average weekly reported volume of trading on all national security markets in the preceding four weeks, or the average weekly volume reported by NASDAQ.[2]
See also
- Securities and Exchange Commission
- Securities Exchange Act of 1934
- Federal financial regulation in the United States
- Administrative state
External links
Footnotes
