Securities Compliance: SEC Laws and Regulations

 The laws and regulations relating to securities compliance that are set and approved by SEC originate from the fact that all investors should have unlimited access to all information and facts about their investments ahead of purchasing them. These rules require companies to provide meaningful financial details to public which gives knowledge used by investors to decide whether to buy, hold, or sell various stocks, futures, bonds and other securities. Here are some acts that safeguard disclosures, investors and maintain a fair deal in the market.

The Securities Act of 1933

This law prohibits misinterpretation, deceit, and other forms of fraud during securities sales, as well as enforcing disclosure of financial and any other relevant information concerning the sale. Most securities are required to be registered with SEC and the prospects and statements given during registration made public. If an investor makes a loss and proves that the provided details were incorrect or incomplete they have a right to recover those losses. However, securities such as limited offerings, intrastate offerings, private offerings, state, municipal or federal government securities do not require registration.

The Securities Exchange Act of 1934

Securities compliance was created under this law and SEC was given power over all fronts of the industry. These incudes;

•    Registration and regulation of brokerage firms

•    Clearance of agents, transfer agents, and other self-regulatory institutions.

•    The agency was granted power to identify and ban various behaviors in the market such as insider trading.

•    The act also gave SEC disciplinary power on regulated individuals and entities.  

Investment Company Act of 1940

This law was made to eliminate conflict of interest in companies that undertake securities trading, investing, reinvesting and also securities selling to the public. It calls for regular disclosure to investors on the operations, investment objectives, policies and structure as well as the financial condition of the company.

Securities compliance is a major issue for any investment company. The strict rules may find you on the other side of the law. If you are not sure, always consult.