Securities Law

Both federal and state laws govern the issuance, sale and purchase of stocks and securities. A securities lawsuit may result if federal or state securities laws are violated.

Securities and Exchange Commission

Congress formed the Securities and Exchange Commission in 1934 to regulate the stock market and prevent corporate abuses relating to the offering and sale of securities and corporate reporting. With the power to license and regulate stock exchanges, the SEC administers six major laws that govern the securities industry:

• Securities Act of 1933
• Securities Exchange Act of 1934
• Trust Indenture Act of 1939
• Investment Company Act of 1940
• Investment Advisers Act of 1940
• Sarbanes-Oxley Act of 2002

Securities Violations

Issuers of securities must follow regulations when disclosing information that may affect the value of an investment. Generally accepted accounting principles must be followed, and knowledge gained from within a company must not be used to a tool against other investors. Actions such as fraud, insider trading and market manipulation constitute securities violations.

Last updated: Sept. 29, 2008