Chapter 46.docx - BUSINESS LAW Chapter 46 Securities Regulation 1 The Nature of Securities Regulation Recognize that the definition of security

Chapter 46.docx - BUSINESS LAW Chapter 46 Securities...

This preview shows page 1 - 3 out of 9 pages.

BUSINESS LAW Chapter 46 Securities Regulation 1. The Nature of Securities Regulation Recognize that the definition of security encompasses a broad range of interests. Understand the functions of the Securities and Exchange Commission and the penalties for violations of the securities laws. Understand which companies the Securities Exchange Act of 1934 covers. Explore the purpose of state Blue Sky Laws. Know the basic provisions of the Dodd-Frank Wall Street Reform and Consumer Protection Act. Section Outline Securities ” are essentially worthless pieces of paper. Their inherent value lies in the interest in property or an ongoing enterprise that they represent. o The Securities Act of 1933 and the Securities Exchange Act of 1934 are two federal statutes that are vitally important, having virtually refashioned the law governing corporations during the past half century. Securities law questions are technical and complex and usually require professional counsel. o For the nonlawyer, the critical question on which all else turns is whether the particular investment or document is a security . o Under Section 2(1) of the act, “security” includes “any note, stock, treasury stock, bond, debenture, evidence of indebtedness, certificate of interest or participation in any profit-sharing agreement, collateral-trust certificate, preorganization certificate or subscription, transferable share, investment contract, voting-trust certificate, certificate of deposit for a security, fractional undivided interest in oil, gas, or other mineral rights, or, in general, any interest or instrument commonly known as a ‘security,’ © 2017 FlatWorld 1
Image of page 1
BUSINESS LAW or any certificate of interest or participation in, temporary or interim certificate for, receipt for, guarantee of, or warrant or right to subscribe to or purchase, any of the foregoing.” The Securities and Exchange Commission (SEC) is over half a century old, having been created by Congress in the Securities Exchange Act of 1934. o The SEC’s primary task is to investigate complaints or other possible violations of the law in securities transactions and to bring enforcement proceedings when it believes that violations have occurred. o When the commission believes that a violation has occurred, it can take one of three courses. First, it can refer the case to the Justice Department with a recommendation for criminal prosecution in cases of fraud or other willful violation of law. Second, the SEC can seek a civil injunction in federal court against further violations. As a result of amendments to the securities laws in 1990, the commission can also ask the court to impose civil penalties . Third, the SEC can proceed administratively—that is, hold its own hearing, with the usual due process rights, before an administrative law judge .
Image of page 2
Image of page 3

You've reached the end of your free preview.

Want to read all 9 pages?

  • Spring '16
  • Lynda Campbell

What students are saying

  • Left Quote Icon

    As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

    Student Picture

    Kiran Temple University Fox School of Business ‘17, Course Hero Intern

  • Left Quote Icon

    I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

    Student Picture

    Dana University of Pennsylvania ‘17, Course Hero Intern

  • Left Quote Icon

    The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

    Student Picture

    Jill Tulane University ‘16, Course Hero Intern

Ask Expert Tutors You can ask You can ask ( soon) You can ask (will expire )
Answers in as fast as 15 minutes