Securities Exchange Act 1934
The Securities Exchange Act of 1934
JFM
GM520 - Legal Political & Ethical Dimensions of Business
April, 12 2010
The Securities Exchange Act of 1934 was passed by congress to strengthen the government’s control of the financial markets. It was preceded by the Securities Exchange Act of 1933 which was enacted during the Great Depression in hopes that the stock market crash of 1929 would not be repeated. The basic difference between the two acts was that the 1933 Act was to govern the original sales of securities by requiring that the issuers, the companies offering the securities, offer up sufficient information about themselves and the securities so that the potential buyers could make informed decisions. The 1934 Act was aimed at the secondary market where buyers don’t buy from the issuer but instead from other investors (Security, 2010). The 1934 Act also required more disclosures from issuers and was enacted to prevent unfair practices at the various exchanges as well as giving the authority of the exchange to the Securities and Exchange Commission which was one of the many administrative agencies set up by the New Deal ideology of Franklin D Roosevelt (Securities, 2003). A major part of 1934 Act is that it required any issuer with over $10 million in assets and 500 or more shareholders to register its stock with the SEC. With this registration came additional required filings such as the 10-Q form, a quarterly financial report, 10-K form, a yearly financial report, as well as an 8-K form used for reporting unusual events, an example of which would be a merger or takeover (Jennings 742). The 1934 Act seems to be an ever changing document as it has been amended by Congress many times through the years. It is due to the need to remedy any new issues that arise whether through technology or new security devices.
This paper will focus on two specific sections of the 1934 Act. The first area that I will focus on is Section 10(b) with Rule 10b-5
JFM
GM520 - Legal Political & Ethical Dimensions of Business
April, 12 2010
The Securities Exchange Act of 1934 was passed by congress to strengthen the government’s control of the financial markets. It was preceded by the Securities Exchange Act of 1933 which was enacted during the Great Depression in hopes that the stock market crash of 1929 would not be repeated. The basic difference between the two acts was that the 1933 Act was to govern the original sales of securities by requiring that the issuers, the companies offering the securities, offer up sufficient information about themselves and the securities so that the potential buyers could make informed decisions. The 1934 Act was aimed at the secondary market where buyers don’t buy from the issuer but instead from other investors (Security, 2010). The 1934 Act also required more disclosures from issuers and was enacted to prevent unfair practices at the various exchanges as well as giving the authority of the exchange to the Securities and Exchange Commission which was one of the many administrative agencies set up by the New Deal ideology of Franklin D Roosevelt (Securities, 2003). A major part of 1934 Act is that it required any issuer with over $10 million in assets and 500 or more shareholders to register its stock with the SEC. With this registration came additional required filings such as the 10-Q form, a quarterly financial report, 10-K form, a yearly financial report, as well as an 8-K form used for reporting unusual events, an example of which would be a merger or takeover (Jennings 742). The 1934 Act seems to be an ever changing document as it has been amended by Congress many times through the years. It is due to the need to remedy any new issues that arise whether through technology or new security devices.
This paper will focus on two specific sections of the 1934 Act. The first area that I will focus on is Section 10(b) with Rule 10b-5
Cited: Jennings, Marianne Moody. The Legal, Ethical and Global Environment of Business. Ohio: South-Western, 2009. Jones, Ronald. “Securities Exchange Act of 1934.” Securities Lawyer’s Deskbook. 1998-2009. The University of Cincinnati College of Law. April 4, 2010. http://www.law.uc.edu/CCL/34Act/index.html "Securities and Exchange Commission." The American Economy: A Historical Encyclopedia. Santa Barbara: ABC-CLIO, 2003. Credo Reference. Web. April 5 2010. "Securities – Securities Exchange Act of 1934." Web. April 5, 2010 <http://law.jrank.org/pages/10097/Securities-Securities-Exchange-Act-1934.html>. "Security." Encyclopedia Britannica. Encyclopedia Britannica Online. Encyclopedia Britannica, 2010. Web. April 4, 2010 <http://search.eb.com/eb/article-27311>. -------------------------------------------- [ 1 ]. (footnote continued)