Securities Exchange Act of 1934
Securities Exchange Act of 1934
Securities Exchange Act of 1934
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Securities exchanges
Securities associations
Self-regulatory organizations (SRO)
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Issuers
Antifraud provisions
Exemptions from reporting because of national security
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From Wikipedia, the free encyclopedia
Securities Exchange Act of 1934
Long title An act to provide for the regulation of securities exchanges and of
over-the-counter markets operating in interstate and foreign
commerce and through the mails, to prevent inequitable and unfair
practices on such exchanges and markets, and for other purposes.
Citations
Codification
Legislative history
Major amendments
Dodd–Frank Wall Street Reform and Consumer Protection Act
Economic Growth, Regulatory Relief and Consumer Protection Act
Securities exchanges[edit]
One area subject to the 1934 Act's regulation is the physical place where securities
(stocks, bonds, notes of debenture) are exchanged. Here, agents of the exchange,
or specialists, act as middlemen for the competing interests in the buying and selling of
securities. An important function of the specialist is to inject liquidity and price continuity
into the market. Some of the more well known exchanges include the New York Stock
Exchange, the NASDAQ and the NYSE American.
Securities associations[edit]
The 1934 Act also regulates broker-dealers without a status for trading securities. A
telecommunications infrastructure has developed to provide for trading without a
physical location. Previously these brokers would find stock prices through newspaper
printings and conduct trades verbally by telephone. Today, a digital information network
connects these brokers. This system is called NASDAQ, standing for the National
Association of Securities Dealers Automated Quotation System.
Issuers[edit]
While the 1933 Act recognizes that timely information about the issuer is vital to
effective pricing of securities, the 1933 Act's disclosure requirement (the registration
statement and prospectus) is a one-time affair. The 1934 Act extends this requirement
to securities traded in the secondary market. Provided that the company has more than
a certain number of shareholders and has a certain amount of assets (500
shareholders, above $10 million in assets, per Act sections 12, 13, and 15), the 1934
Act requires that issuers regularly file company information with the SEC on certain
forms (the annual 10-K filing and the quarterly 10-Q filing). The filed reports are
available to the public via EDGAR. If something material happens with the company
(change of CEO, change of auditing firm, destruction of a significant number of
company assets), the SEC requires that the company issue within 4 business days
an 8-K filing that reflects these changed conditions (see Regulation FD). With these
regularly required filings, buyers are better able to assess the worth of the company,
and buy and sell the stock according to that information.
Antifraud provisions[edit]
While the 1933 Act contains an antifraud provision (Section 17), when the 1934 Act was
enacted, questions remained about the reach of that antifraud provision and whether a
private right of action—that is, the right of an individual private citizen to sue an issuer of
stock or related market actor, as opposed to government suits—existed for purchasers.
As it developed, section 10(b) of the 1934 Act and corresponding SEC Rule 10b-5 have
sweeping antifraud language. Section 10(b) of the Act (as amended) provides (in
pertinent part):
It shall be unlawful for any person, directly or indirectly, by the use of any means or
instrumentality of interstate commerce or of the mails, or of any facility of any national
securities exchange ...
(b) To use or employ, in connection with the purchase or sale of any security registered on a
national securities exchange or any security not so registered, or any securities-based swap
agreement (as defined in section 206B of the Gramm–Leach–Bliley Act), any manipulative or
deceptive device or contrivance in contravention of such rules and regulations as the
Commission may prescribe as necessary or appropriate in the public interest or for the
protection of investors.
See also[edit]
Securities regulation in the United States
Commodity Futures Trading Commission
Securities commission
Chicago Stock Exchange
Financial regulation
List of financial regulatory authorities by country
NASDAQ
New York Stock Exchange
Stock exchange
Regulation D (SEC)
Related legislation
References[edit]
1. ^ Lin, Tom C. W. (April 16, 2012). "A Behavioral Framework for Securities Risk". Seattle University
Law Review. Rochester, NY. 34: 325. SSRN 2040946.
2. ^ Cox, James D.; Hillman, Robert W.; Langevoort, Donald C. (2009). Securities Regulation: Cases
and Materials (6th ed.). Aspen Publishers. p. 11.
3. ^ "Intelligence Czar Can Waive SEC Rules". BusinessWeek. May 23, 2006. Archived from the
original on May 25, 2006. Retrieved October 9, 2007.
External links[edit]
Securities Exchange Act of 1934, as amended, in HTML/PDF/details in the GPO Statute
Compilations collection
United States Securities and Exchange Commission (SEC) – Official site
Introduction to the Federal Securities Laws
Securities Lawyer's Deskbook – Securities Exchange Act of 1934. University of Cincinnati
College of Law.
Public Law 73-291, 73d Congress, H.R. 9323: Securities Exchange Act of 1934
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