Overview of Securities Regulation - June 28 & July 5

Question 1

What is the 33 Act? (Epstein)

Answer 1

The Securities Act of 1933 “governs the issuance of securities by the corporation itself.” (449)

Question 2

What is the 34 Act? (Epstein)

Answer 2

The Securities Act of 1934 “provides information to the markets for new securities and resales by requiring many corporations continually to provide detailed public reports about their operations.” (449)

Question 3

How do the federal securities laws protect investors. (Epstein)

Answer 3

They protect investors in two ways. “First are disclosure requirements: companies that issue securities must provide specific detailed information to investors about themselves and the securities. Second, the laws permit investors to sue issuers who have sold securities by using false or misleading information. We now provide a very general introduction to the ’33 Act’s disclosure requirements.” (449)

Question 4

What is federal regulation of the issuance of securities based on? (Epstein)

Answer 4

“Federal regulation of the issuance of securities to the public is based on disclosure and antifraud liability” (450)

Question 5

What is the main objective of the federal securities laws? (Epstein)

Answer 5

“Basically, the main objective of the law is to restrict the investment in unregistered (i.e., non-public) securities to people who are wealthy enough to be able to bear the loss of their money in a risky investment.” (450)

Question 6

What are blue sky laws? (Epstein)

Answer 6

Blue sky laws are additional securities regulation laws that protect against shady promoters who would sell stock by promising the buyer the whole blue sky. (450)

Question 7

What is the JOBS Act and what did it do? (Epstein)

Answer 7

The Jumpstart our Business Startups Act of 2012 “created an exemption from the normal registration requirements for certain businesses that are seeking to raise relatively small amounts of money.” (452)

Question 8

What advantages did the JOBS Act provide? (Epstein)

Answer 8

“First, these companies can obtain money without complying with normal registration requirements. Second, the companies can accept investments even from people who are not rich or sophisticated.” (452)