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Importance of Securities Act of 1933


The Securities and Exchange Act of 1933 one of the laws that govern the securities industry. It was the first major legislation regarding the sale of securities, that shifted power from states to the federal government. It is known as the "truth in securities" law which President Franklin D. Roosevelt signed as a part of the New Deal.The Act was created to protect investors after the stock market crash of 1929, biggest bear market in Wall Street 's history.

The Securities Act of 1933 had two main objectives:
  • requirement that investors receive financial and other significant information regarding securities that are being offered for public sale.
  • prohibition of deceit, misrepresentation and other fraud in the sale of securities
Securities and Exchange Commission that was created year later, in 1934 governs the Securities Act of 1933. In order to accomplish set objectives SEC requires companies to register their securities and disclose essential information in the process which will enable investors to make informed decisions. Even though SEC requires accurate information it cannot guarantee it. In the United States securities must be registered unless they can be exempt.The registration form and prospectus provide investors with substantial information:  
  • description of company's properties and business
  • description of the securities that are offered for public sale
  • information about company's management
  • financial statements certified by independent accountant
Shortly after the registration statement and prospectus are filed with the Sec they are publicly available. As we have already mentioned some offering of securities are exempt from registration including:
  • private offerings to a limited number of persons or institutions
  • offerings of limited size
  • intrastate offerings
  • securities of municipal, state and federal governments.
Since its creation several amendments to Securities Act of 1933 have been passed, with the latest enacted in 2018.

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Location: West Palm Beach, FL, USA

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