Securities Laws, Rules and Regulations

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Securities law

Securities Regulations

The securities laws in the United States are a complex web of multiple and overlapping statutes and rules from over 52 different regulatory agencies. Mark Astarita‘s overview, Federal Securities Laws, a Securities Lawyer Guide, provides introductory information regarding federal securities laws.

Here we have provided links to the major federal statutes and rules.

These laws were designed to improve investor confidence and protection after the stock market crash of 1929. The government continues to reform security regulation as new investor protection issues arise to protect the investing public.

In 1933 Congress enacted the Securities Act of 1933 which regulates the sale and distribution of stock to the public. The Act created registration and disclosure provisions to protect public investors.

The Securities and Exchange Commission (SEC) has established a set of exemptions for companies that have already gone public. These exemptions allow the SEC to waive the registration requirements for certain classes of securities. Companies that have been exempted from registration may still be required to file periodic reports.

In 1934, the Securities Exchange Act of 1934 was passed by Congress to regulate securities exchanges and the trading of securities. The ’34 Act regulates the disclosure of security ownership, prohibits stock manipulation, and establishes disclosure requirements for the trading of securities all in the name of investor protection.

Additional investor protections are found in the various State securities laws. Each state has its own rules, and links to those can be found at our Guide to State Securities Administrators.

These rules and statutes are part of the regulatory web that governs the security industry and its investors. These rules impact every security transaction and virtually every investment made by the investing public

Securities Law Organizations

The Securities and Exchange Commission (SEC) is responsible for overseeing the nation’s stock exchanges, including the New York Stock Exchange and the Nasdaq.

The SEC also has responsibility for enforcing the anti-fraud provisions of the federal securities laws, as well as the registration and disclosure requirements of the federal securities laws.

The Commodity Futures Trading Commission (CFTC) is responsible for oversight of the futures markets, as well as the clearinghouse and trading for the commodity contracts traded. The Commodity Exchange Act of 1936 established the CFTC. The CFTC is responsible for regulating all commodity transactions, including commodity futures and options contracts.

The National Futures Association (NFA) is the self-regulatory organization (SRO) that oversees the futures industry.

The Financial Industry Regulatory Authority (FINRA) is the self regulatory organization that oversees the stock brokerage industry.

The Securities Investor Protection Corporation (SIPC) is a nonprofit corporation that insures funds invested in broker-dealer accounts. The SIPC is funded by assessments paid by the brokers and dealers.

Each State has its own securities commission and rules.

For an overview of the regulatory scheme, read Introduction to the Federal Securities Laws and Introduction to the State Securities Laws.


The Federal Rules and Regulations

The Securities Act of 1933

The ’33 Act governs the initial offering, issuance and registration of securities, as opposed to the Securities Exchange Act of 1934 which governs financial reporting, and the registration of people involved with the sale of securities. The full text of the Securities Act of 1933 is available here.

From the SEC, outlines of the forms and instructions for filing the various security registration filings. Not for use by a novice, but provides good background material.

The Securities Exchange Act of 1934

The full text of the 1934 Act, which primarily governs the purchase and sale of securities, securities brokerage firms and securities exchanges.

Rules promulgated under the Securities Exchange Act of 1934.

Selected Forms Prescribed for Use under the Securities Exchange Act of 1934.

Investment Company Act

This Act regulates the organization of companies, including mutual funds, that primarily invest and trade in securities, and whose own securities are offered to the investing public.

The Act is designed to minimize conflicts of interest that arise in these complex operations. The Act requires these companies to disclose their financial condition and investment policies to investors when stock is initially sold and, subsequently, on a regular basis. The focus of this Act is on disclosure to the investing public of information about the fund and its investment objectives, as well as on investment company structure and operations.

Rules promulgated under the Investment Company Act.

Investment Adviser’s Act of 1940

With certain exceptions, this Act requires that firms or sole practitioners who are compensated for advising others about securities investments must register with the SEC and conform to regulations designed to protect investors.

Since the Act was amended in 1996 and 2010, generally only advisers who have at least $100 million of assets under management or advise a registered investment company must register with the Commission. Other investment advisers typically register with the state in which the investment adviser maintains its principal place of business and or where its investors reside..

Rules promulgated under the Investment Advisers Act of 1940

Securities Investor Protection Act of 1970

This Act established the Securities Investor Protection Corporation (SIPC). Most brokers and dealers registered under the Securities Exchange Act of 1934 are required to be members of SIPC. SIPC maintains a fund that is intended to protect investors against the misappropriation of their funds and of most types of securities in the event of the failure of their broker.

The National Securities Markets Improvement Act of 1996 (NSMIA)

National Securities Markets Improvement Act of 1996 amended Section15(h) of the Securities Exchange Act of 1934.  The Act made federal law controlling in certain aspects of the regulation of broker-dealers, such as record-keeping, financial standards, and operating requirements.  In addition, the NSMIA amended the Securities Act of 1933 so that certain types of securities are no longer subject to state registration laws.  However, offers and sales must still be registered, market participants must still register per a state’s blue skies laws, and state fraud laws are still available as causes of action for individual investors.

Sarbanes-Oxley Act of 2002

Sarbanes-Oxley was adopted as a reaction to a number of corporate and accounting scandals and set new or expanded requirements for all U.S. public company boards, management, and public accounting firms. There are also a number of provisions of the Act that also apply to privately held companies, such as the willful destruction of evidence to impede a federal investigation. The Act covers the responsibilities of a public corporation’s board of directors, adds criminal penalties for certain misconduct, and required the Securities and Exchange Commission to create regulations to define how public corporations are to comply with the law.

Dodd-Frank Wall Street Reform and Consumer Protection Act

Related Sites and Links

Recent Securities Law Opinions.

Links to the case law that has developed the federal securities laws.

Supreme Court Securities Law Opinions

From Cornell University, all of the recent Supreme Court Decisions relating to the federal securities laws including Kokesh vs. SECSEC vs Edwards, Lorenzo vs. SECGabelli vs. SECLucia vs. SECSEC vs. Howey

The State Blue Sky Laws

In addition to the federal securities laws, each state has its own securities laws. For an overview, please read Introduction to the Blue Sky Laws. We maintain a complete list of their snail mail and email addresses, as well as links to the rules and regulations that are available online in our Guide to State Securities Administrators.

Related Securities Books:

When you need a quick answer to a securities question, turn to Fundamentals of Securities Regulation. The book is a securities law “must-have.” This version is the distillation of the authoritative 11-volume treatise, Securities Regulation, in one convenient volume, offering expert analysis of every significant aspect of securities law, including Primary liability under 10(b); Insider trading; Sanctions; Disclosure requirements; Rules and forms for offerings; SEC reporting; Forward-looking statements; Class action suits; Bespeaks caution cases; ADR in securities disputes.

Another useful publication is The Securities Enforcement Manual, Second Edition: Tactics and Strategies. Published by the American Bar Association, this new Second Edition completely updates the first edition published in 1997. Included is comprehensive coverage of proven approaches and techniques for dealing with an enforcement threat from the SEC, self-regulatory organizations, or state securities regulators. It takes you step-by-step through enforcement investigations and proceedings, providing you with strategies to influence the outcome of an investigation and prevent or minimize the adverse effects of enforcement actions

Sallah Astarita & CoxRepresenting Advisors and Investors, Nationwide.
Securities Attorney at Sallah Astarita & Cox | 212-509-6544 | | Website | + posts

Mark Astarita is a nationally recognized securities attorney, who represents investors, financial professionals and firms in securities litigation, arbitration and regulatory matters, including SEC and FINRA investigations and enforcement proceedings.

He is a partner in the national securities law firm Sallah Astarita & Cox, LLC, and the founder of The Securities Law Home Page -, which was one of the first legal topic sites on the Internet. It went online in 1995 and is updated daily with news, commentary and securities law related links.