• September 2019
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Securities Exchange Act of 1934

The Securities Exchange Act of 1934 was passed to provide supervision of securities transactions on the secondary market and to regulate brokers-dealers and exchanges in order to protect the investing public.

 

The most consequential legacy of the Securities Exchange Act of 1934 is the enduring influence of the U.S. Securities and Exchange Commission. This New Deal legislation established the SEC in part as a response to the stock market crash of 1929. The SEC maintains broad authority over the securities industry to this day.

 

As a result of the SEC’s efforts, securities trading is more transparent, informed by more accurate information, less fraudulent and inspires greater investor and consumer confidence than it would be otherwise. Two of the mechanisms that the SEC uses in order to achieve these aims stem from provisions of the Securities Act of 1934. Specifically, the SEC is empowered to impose discipline and consequences for non-compliance with certain financial regulations and also is also empowered to require public companies to register securities and regularly report material information about their business and financial situations. This allows the public and investors consistent access to important information so that they can make informed decisions about their investing options.

 

EXAMPLE:

Executive: “This registration and reporting paperwork takes forever! And I have to employ so many attorneys and accountants in order to get it done. And there is always more of it yet to be filed! Who do I see about this?”

Attorney: “The Securities Exchange Act of 1934.”