Securities act of 1933 - Essay Example

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Securities act of 1933

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.. ...Show more


Securities act of 1933 is necessary to bring into light more information about the offered securities for the investors. It has bounded the companies to disclose accurate information based on which the investors will share their capital or invest their money to the market…
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