Chapter 41 CORPORATIONS— Securities Law and Corporate Governance See Separate Lecture Outline System I NTRODUCTION After the stock market crash of 1929, Congress enacted the Securities Act of 1933, the Securities Exchange Act of 1934, and other legislation to require that investors be provided with more information to help them make buying and selling decisions and to prohibit deceptive, unfair, and manipulative practices. Since the 1930s, the sale and transfer of securities have come to be heavily regulated by federal and state statutes and by government agencies. This chapter looks at these securities regulations, including their application online. A DDITIONAL R ESOURCES — 37
38 INSTRUCTOR’S MANUAL TO ACCOMPANY BUSINESS LAW , ELEVENTH EDITION A UDIO & V IDEO S UPPLEMENTS The following audio and video supplements relate to topics discussed in this chapter— PowerPoint Slides To highlight some of this chapter’s key points, you might use the Lecture Review PowerPoint slides compiled for Chapter 41. C HAPTER O UTLINE I. The Securities and Exchange Commission The Securities and Exchange Commission (SEC) administers the federal securities laws and regulates the sale and purchase of securities. A. T HE B ASIC F UNCTIONS OF THE SEC The text lists the SEC’s basic functions, which include regulating securities trades and investigating securities fraud. B. O RGANIZATION OF THE SEC The SEC is composed of the following divisions with the stated responsibilities. 1. Corporate Finance : Reviews documents filed by publicly-held corporations. 2. Market Regulation : Oversees the major securities markets participants. 3. Investment Management : Interprets laws affecting investment companies and supervises mutual fund companies. 4. Enforcement : Investigates securities violations, and recommends sanctions, if any, to be pursued and whether they should be sought in a court or before an administrative law judge. C. U PDATING THE R EGULATORY P ROCESS The SEC requires companies to file certain information electronically so that it may be available online in the SEC’s EDGAR (Electronic Data Gathering, Analysis, and Retrieval) database. A NSWER TO C RITICAL A NALYSIS Q UESTION IN THE F EATURE — I NSIGHT INTO E-C OMMERCE Clearly, continuing to use paper proxy materials and press releases printed on paper has an impact on the environment. Even when the paper is recycled, the sludge from the ink presents a problem. What might be preventing the SEC from mandating the use of online proxy materials to prevent the waste of so much paper?
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