Skip to main content

Securities Act of 1934


Companies raise capital by issuing shares on the primary market which is regulated by Securities Exchange Act of 1933. The following year Securities exchange Act of 1934 was enacted by Roosevelt administration which regulates securities on the secondary market, where they are traded after original issuance. This Act created Securities and Exchange Commission (SEC) and gave it broad power to register, regulate and oversee securities, markets and financial professionals. SEC has disciplinary power over regulated entities and person associated with them if they engage in prohibited conducts in the market.

Requirements outlined in securities Act of 1934 must be followed by all companies that are listed on stock exchange. Primary requirements include corporate reporting, proxy solicitation, tender offers, insider trading and registration of exchanges and associations.

Companies that have more than $10 million is assets and more than 500 shareholders must do annual and periodic reports.

Proxy materials illustrate specific company's information that are available to shareholders sent before annual shareholder meeting. SEC governs disclosures and materials used to solicit shareholders votes held for the election of directors or approval of corporate actions. This information contained in proxy material must be filed with SEC in advance of solicitation to ensure compliance with the rules.

The Act requires disclosure of important information by anyone who is seeking to acquire more than 5% of ownership in the company by purchasing securities because often this is part of the attempt to gain control over the company.

Insider trading is when someone buys or sells public company's shares and has non-public material information about the stock. It is one of the fraudulent activities connected with offer, purchase and sale of securities, prohibited by The Securities Act of 1934.

Market participants, exchanges, brokers, dealers, transfer agents, clearing agencies are required to register with the SEC meaning they have to file disclosures on regular basis. SEC also regulates nation's self regulatory organizations (SRO). Self regulatory organizations exercise some degree of regulatory authority over an industry or profession. Commission delegated authority to certain SRO like FINRA or NYSE to enforce certain industry standards and requirements related to securities trading and brokerage.
Labels:
Location: West Palm Beach, FL, USA

Comments

Post a Comment

Popular posts from this blog

OTC stocks more difficult to trade and deposit

  Mina Mar Group helps micro-cap companies structure their growth. Micro-capitalized companies are those with less than $50,000,000 in equity, sometimes under $1,000,000. Restructuring involves raising money (both debt and stock), and planning how they will eventually harvest that wealth. If you’re a founder or investor, the secret to harvesting your equity is to possess assets with a developed market for their sale; up until recently, that market was the public market. Now, Over-The-Counter Securities (“OTC Securities”) don’t serve that purpose since, unless you’re a tech unicorn doing an IPO, there are essentially no ways to sell the shares you’ve invested in. OTC securities – how they were deposited five years ago. Brokerages all around the country have tightened compliance over the past five years to the point where no one may deposit share certificates into their brokerage accounts, even if they can prove that they paid for them. Consider the following demand from a secondary ...
Post a Comment
Read more

Going through Acquisition with Mina Mar Group

An acquisition is the purchase of one business or company by another company. It happens when acquiring company buys most or all target company's shares in order to take control and or other assets of the company. They have to buy more than 50% of ownership. In acquisition usually bigger company buys smaller company and absorb it or run it as subsidiary. Roll-ups or consolidation happen when two or more companies combine in a new business entity. Acquisitions are divided into "private" and "public" depending on whether acquired or target company is or is not listed on the public market. Additional dimension or categorization consists of whether an acquisition is friendly or hostile (hostile takeover). More mergers and acquisitions happens with small to medium size companies. One type of acquisition is reverse merger or reverse takeover enables private company to be publicly listed in a relatively short time frame. Reverse merger occurs when a privately ...
10 comments
Read more

Our perspective on reverse merger

When we are talking about market perspective usually the financial community is mostly focused on private companies that want to go public and are prepared to pay for the privilege of going through an IPO or reverse merger. That is why most financial consultants are looking for the public shell company just to close the deal. Often private companies that use reverse merger to go public are ill-informed on ability to raise funds, unprepared for the intensive effort and extensive costs to create liquidity. This can even lead company to become a shell itself due to lack of action in implementation of needed solutions. This way there is no long term benefit on both sides. Mina Mar Group sees things quite differently. Instead of making quick profit shared between shell owner and us. We deal with private companies that already offer profits  and that truly deserve to be publicly traded and can attract investors at the retail and institutional level and build...
11 comments
Read more