Question

Two most important laws regulating securities in the united states are (i) the securities act of 1933 (the 1933 act), and (ii) the securities and exchange act of 1934 (the 1934 act). each of these two acts are landmark pieces of legislation that continue to regulate the operation of us securities markets today (and both are discussed in the textbook). the 1933 act regulates the sale or issuance of new securities. List and explain two provisions of how the 1933 act regulates such sales or issuances.

Answer 1

The Securities Act of 1933 regulates new securities issuance by requiring comprehensive disclosure of material information through registration with the SEC and by strictly prohibiting misrepresentations and fraudulent activities in the offering and sale of new securities.

Step-by-step explanation:

The Securities Act of 1933 (the 1933 Act) is a fundamental piece of legislation that regulates the issuance and sale of new securities in the United States. Two key provisions of the 1933 Act are:

1. Disclosure Requirements: This provision mandates that companies issuing new securities must provide investors with material information about the securities and the issuer. To facilitate this, companies are required to file a registration statement with the Securities and Exchange Commission (SEC), which includes a prospectus containing essential details such as the company's financial situation, the risks involved, and the use of proceeds from the sale.
2. Prohibition of Misrepresentation and Fraudulent Activities: The act strictly prohibits deceit, misrepresentations, and other fraudulent activities in the sale of securities. This is fundamental in maintaining investor confidence and ensuring a fair market, as it holds issuers and underwriters accountable for the information they provide to the public about their securities.

These provisions aim to protect investors by providing transparency and preventing fraudulent activities in the sale of new securities. The act has been instrumental in restoring and maintaining public confidence in the U.S. financial markets after the stock market crash of 1929.