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Securities Regulation Overview
Securities Act of 1933Two main objectives: to require that investors receive financial and other significant information concerning securities being offered for public sale; and to prohibit deceit, misrepresentations and other fraud in the sale of securitiesIn general, securities sold in the U.S. must be registered with the Securities and Exchange Commission (SEC) (unless qualified for certain exemptions) and must provide a minimum required amount of information regarding the securityAfter a registration statement is filed with the SEC, an investment prospectus must be provided to investors
Glass-Steagall Act (1933)This Act separated commercial and investment banks and limited the underwriting capabilities of commercial banksOfficials of firms associated with security investments were restricted from serving as directors or officers of commercial banksThe Federal Deposit Insurance Corporation (FDIC) was founded by this Act to insure bank deposits
Securities Exchange Act of 1934This Act deals primarily with the supervision of new security offerings, ongoing reporting requirements for these offerings and the conduct of exchangesCompanies with >$10 million in assets and >500 owners must file annual and other periodic reportsProxy solicitations and the acquisition of >5% ownership stakes in registered companies are subject to filing requirementsThis Act created the SECInsider trading is prohibited by this Act
Investment Company Act of 1940The Act's purpose is "to mitigate and... eliminate the conditions... which adversely affect the national public interest and the interest of investors" Specifically, the Act regulates conflicts of interest in investment companies and securities exchangesIt protects the public primarily by requiring disclosure of material details about the investment company and also places some restrictions on mutual fund activities such as
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U.S. Securities and Exchange Commission, Global Financial Reform