Learn more about Securities Law

Securities law is the field of U.S. law that aims to regulate the various aspects of transactions and other dealings with interests under consideration for purchase.

A security is only valued at the claims they entitle their owner to make upon the assets and earnings of the issuer or the voting power that accompanies such claims.

Securities have several different forms, some examples are: notes, stocks, bonds, trusts and various certificates. Two types of transactions can take place with these securities – issuer transactions and trading transactions.  

Issuing a security is a means by which a company will raise capital such as giving out stock options to buy a portion of the business. Trading transactions differ in that you are purchasing and selling outstanding securities among investors.

Because a security has no inherent tangible value, it will depend on the issuer’s financial condition, products, markets and management. The policy behind security law is derived from this as the government seeks to ensure that investors receive accurate and necessary information regarding the type and value of the interest under considerate for purchase.

On the federal level, the primary securities regulator is the Securities and Exchange Commission (SEC), which most people have heard of.  Additionally, self-regulatory organizations like the Securities Investor Protection Corporation (SIPC) and the Financial Regulatory Authority (FINRA) both set heavy rules for public companies. Each security trading platform will also have their own specific rules such as the New York Stock Exchange to help inform investors.

The main federal regulations fall under: the Securities Act of 1933, Securities Exchange Act of 1934, Trust Indenture Act of 1939, Investment Company Act of 1940, Investment Advisers Act of 1940 and the newest Dodd-Frank Wall Street Reform.

These federal laws cover regulating distribution of new securities, trading securities, brokers and exchanges as well as debt, mutual funds and investment advisers.

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