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Securities are investments in such areas as bonds, stocks, notes, investment contacts and oil or mineral rights. Securities laws are in place to ensure that buyers and sellers of securities receive complete and accurate information about the interest in which they are purchasing.

Securities laws are regulated at both the state and federal levels. The Federal Securities Act of 1933 was created to regulate securities. State securities laws, however, vary from state to state, but typically include registration requirements that both brokers and securities dealers must comply with.

Federal Securities Act of 1933

The Federal Securities Act of 1933 was created in response to the stock market crash of 1929 and the ensuing economic collapse that happened the years following the crash. Prior to that time, regulation of securities were chiefly governed by state laws. When Congress enacted the 1933 Federal Securities Act, it left in place the existing state securities laws and provided a supplement to the laws that were already in place.


The 1933 Act has two basic objectives:
  • Require that investors receive significant (or “material”) information concerning securities being offered for public sale.

  • Prohibit deceit, misrepresentations, and other fraud in the sale of securities
  • .


Congress intended the law to empower investors, and not the government, to make informed investment decisions. To assist with its objectives of informing potential investors and fair dealing in the market place, the 1933 Act requires issuers to disclose significant information about themselves. Disclosure also has the added benefit of discouraging bad behavior on the part of those selling securities.

Other Securities Acts

In addition to the Securities Act of 1933, there were several other acts that were created to protect those that purchase securities.

The Exchange Act – Allows investors access to current financial another information regarding securities. The act focuses on securities that are publicly traded. The Exchange Act prohibits brokerage firms and other from engaging in fraudulent or unfair behavior, such as insider trading.

Investment Company Act – The Investment Company Act was created in 1940 and governs activities of investment companies. This piece of legislation clearly defines the responsibilities and limitations placed upon fund companies that offer investment products to the public.

Advisors Act – The Advisors Act establishes a pattern of regulating those that manage other people's money. The act is very similar to the
Exchange Act, setting the compensation limits for brokers and dealers that are advising other about securities.

By Chris Saunders           


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