What is the Securities Exchange Act of 1934? (2024)

FAQs

What is the Securities Exchange Act of 1934? ›

The Securities Exchange Act of 1934 regulates secondary financial markets to ensure a transparent and fair environment for investors. It prohibits fraudulent activities, such as insider trading, and ensures that publicly traded companies must disclose important information to current and potential shareholders.

The Securities Exchange Act of 1934 gives the SEC broad powers to enforce U.S. federal securities law, but also investigate potential violations such as insider trading, the sale of unregistered stocks, manipulation of market prices and disclosure of fraudulent financial information.

The Securities and Exchange Act of 1934 ("1934 Act," or "Exchange Act") primarily regulates transactions of securities in the secondary market.

The Securities Exchange Act of 1934 governs the rules for agents, broker dealers and securities that trade on the secondary markets. In an attempt to provide a fair and orderly market for investors, the Act also determines the laws that regulate the exchanges and their participating broker-dealers.

The goal of the act was to create transparency in the financial statements of corporations. It established laws against misrepresentation and fraudulent activities in the securities markets. The Securities Act is enforced by the Securities and Exchange Commission, created by the Exchange Act of 1934.

The Securities Act of 1933 (as amended, the “Securities Act”) was passed to ensure that investors have financial and other important information about securities that are being sold publicly. It also bans the use of fraud, deceit, and misrepresentation in the sales of securities.

It proved to be beneficial for almost everyone, businesses and investors. It created better conditions for American businesses and a fairer market for American investors (The Best New Deal Agency). The only complaints came from the few businesses that had previously been benefiting from the system being fixed.

Through the Exchange Act, the SEC gained the authority to register, regulate, and oversee brokerage firms, transfer agents, and clearing agencies.

The best answer is D. The Securities Exchange Act of 1934 requires the registration of each securities exchange, so that it now becomes a “self-regulatory organization” (SRO), subject to SEC oversight.

What are the goals of the SEC? ›

To protect investors, maintain fair, orderly, and efficient markets, and facilitate capital formation.

Section 5 of the 1933 Act is meant primarily as protection for United States investors. As such, the U.S. Securities and Exchange Commission had only weakly enforced regulation of foreign transactions, and had only limited Constitutional authority to regulate foreign transactions.

Today, it continues to carry out its original mission to protect investors through the regulation and enforcement of securities laws.

The SEC was established by the passage of the U.S. Securities Act of 1933 and the Securities and Exchange Act of 1934, largely in response to the stock market crash of 1929 that led to the Great Depression.