Securities act of 1933 Essay Example | Topics and Well Written Essays - 1750 words

Securities act of 1933 - Essay Example In fact, this law was brought into light after the great depression in 1929 in the US economy. By means of fraudulent activities, many companies sold fake securities based on false information and thus huge investment from the investors went in vain. So, underlying principle of 1933 act was to help potential investors get information about the company (issuer) and its securities that are offered for sale publicly. This overt expression from the issuer, thereby results a more concerned securities market because the investor were fully aware of the background of the company and their securities before investing money into purchase. Thus, it was a pressing need for a first major federal law which can govern the unstable situation in a uniform manner. In fact, from the buyer point of view, it was really inspiring step to make the issuers conformed to certain rules as to disclose their information accurately before they offer or sale securities. Regardless of whether securities must be registered, the 1933 Act makes it illegal to commit fraud in conjunction with the offer or sale of securities. A scammed investor can sue for recovery under the 1933 Act. Rule 144, promulgated by the SEC under the 1933 Act, permits, under limited circumstances, the sale of restricted and controlled securities without registration.. The amount of securities sold during any subsequent 3-month period generally does not exceed any of the following limitations: 1% of the stock outstanding, The avg. weekly reported volume of trading in the securities on all national securities exchanges for the preceding 4 weeks, and The avg. weekly volume of trading of the securities reported through the consolidated transactions reporting system (NASDAQ). Regulation S is a "safe harbor" that defines when an offering of 'securities' will be deemed to come to rest abroad and therefore not be subject to the registration obligations imposed under Section 5 of the 1933 Act. Civil Liability under the 1933 Securities Act Any violation of the registration requirements can be a cause to civil liability for the issuer and underwriters Sections 11, 12(a) (1) or 12(a) (2) of the Act. Additional