Securities and Exchange Acts of 1933 & 1934
When a company wishes to go public, they participate in an Initial Public Offering (IPO), which allows the company to acquire more cash for their business purposes. It’s possible that it’s a brand-new company, or perhaps a company that was in the private sector and wishes to go public. There is a very big difference between the private and public sector in that business are governed by congress to follow certain rules and regulations and face severe fines and other lawful punishments if they fail to do so. The Securities and Exchange Act of 1933 is referred to as the “truth in securities” law and requires that corporations disclose all financial and other significant information regarding its publicly offered securities and they are prohibited from being deceitful and misrepresentative in the said sale of securities (Securities).
Prior to Congress enacting the Securities and Exchange Acts, along with subsequent acts to further distinguish how securities would be traded and/or sold, states governed their own laws regarding these issues, with what some federal lawmakers called “blue sky” laws (
The purpose of the Securities and Exchange Acts of both 1933 and 1934 was to re-establish confidence in the public with regards to publicly traded corporate stocks and other securities after the infamous stock market crash on Black Tuesday in the year 1929. The stories of the aftermath are a horrendous truth that made families go bankrupt and even resulted in head-of-households committing suicide due to losing every last penny they had. At the time of the stock market crash, the securities being offered by corporations were being governed by state laws, not federal laws. The public’s faith in the purchasing securities needed to be restored. After the stock market crash happened, Congress stepped in to bring some order to the chaos that occurred.
All securities that are offered to the public by companies must be registered...