Understanding federal securities law

On Behalf of | Jan 31, 2019 | Securities |

When a company is looking to sell its securities, its owners must be aware of the laws in place that regulate securities across the United States. These laws were put in place mainly to protect investors and to increase transparency so that buying and selling could take place with full disclosure.

There are two laws that specifically address issues relating to securities exchanges. These are the Securities Act of 1933 and the Securities Exchange Act of 1934, more commonly known as the “Exchange Act”. It is important that you understand what these laws mean for selling stocks and bonds.

Understanding the basic requirements of the Securities Act

The Securities Act requires that in the majority of situations, a company needs to go through the process of registration before “going public” on the stock exchange. This means that they must make a statement about the nature of the securities they are offering to the public. This statement is subject to a review and helps to guide investors in an honest way.

Understanding the basic requirements of the Exchange Act

The Exchange Act was put in place one year after the Securities Act and addressed the need for updated information about securities. This means that companies now need to regularly report information about the way that businesses are run and managed and about the current financial condition of the company.

If you are preparing to go public as a company in New York City, it is important that you understand the intricacies of the law and how regular reporting has the potential to influence the value of securities.

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