Securities Exchange Act of 1934
The Securities Exchange Act of 1934 is the federal law regulating secondary market trading, creating the SEC, and requiring ongoing disclosure by public companies, often called the "People Act" for regulating market participants.
Exam Tip
1934 Act = created SEC, regulates TRADING (People Act). 10-K annual, 10-Q quarterly, 8-K current. Section 16 = insider reporting!
What is the Securities Exchange Act of 1934?
The Securities Exchange Act of 1934 regulates the secondary trading of securities (stocks, bonds, debentures) in the United States. It created the Securities and Exchange Commission (SEC) and established rules for exchanges, broker-dealers, and ongoing disclosure by public companies.
Key Provisions
| Provision | Purpose |
|---|---|
| Created SEC | Federal securities regulator |
| Exchange Registration | Regulate stock exchanges |
| Broker-Dealer Registration | License securities firms |
| Ongoing Disclosure | Periodic reporting requirements |
| Insider Trading | Prohibit unfair advantages |
SEC Powers Under the '34 Act
| Power | Description |
|---|---|
| Rulemaking | Create and enforce regulations |
| Investigation | Subpoena power, examine records |
| Enforcement | Civil and administrative actions |
| Oversight | Supervise SROs (FINRA, exchanges) |
Periodic Reporting Requirements
| Report | Frequency | Content |
|---|---|---|
| Form 10-K | Annual | Full financial statements, audit |
| Form 10-Q | Quarterly | Unaudited financials, updates |
| Form 8-K | Current | Material events (immediately) |
| Proxy Statement | Annual | Shareholder meeting info |
Insider Reporting (Section 16)
| Form | When Filed | For |
|---|---|---|
| Form 3 | Within 10 days of becoming insider | Initial holdings |
| Form 4 | Within 2 business days | Changes in ownership |
| Form 5 | Annual | Deferred/exempt transactions |
Insider Definition (Section 16)
| Category | Who Qualifies |
|---|---|
| Officers | CEO, CFO, principal officers |
| Directors | Board members |
| 10% Owners | Beneficial owners of 10%+ |
Anti-Fraud Provisions
| Section | Prohibition |
|---|---|
| Section 9 | Market manipulation |
| Section 10(b) | Fraud in securities trading |
| Rule 10b-5 | Material misstatements/omissions |
| Section 16(b) | Short-swing profits by insiders |
1933 Act vs. 1934 Act
| Feature | 1933 Act | 1934 Act |
|---|---|---|
| Focus | New issues (primary) | Trading (secondary) |
| Nickname | "Paper Act" | "People Act" |
| Key Document | Prospectus | Periodic reports |
| Registration | Securities | Exchanges, firms, securities |
Self-Regulatory Organizations
The '34 Act authorizes SROs:
- FINRA (broker-dealers)
- NYSE, NASDAQ (exchanges)
- MSRB (municipal securities)
Study This Term In
Related Terms
Securities Act of 1933
SecuritiesThe Securities Act of 1933 is the federal law requiring registration and disclosure for new securities offerings, ensuring investors receive material information before buying, often called the "Paper Act" or "Truth in Securities Act."
SEC (Securities and Exchange Commission)
GeneralThe SEC is the U.S. federal agency responsible for enforcing securities laws, regulating securities markets, and protecting investors from fraud and market manipulation.
Insider Trading
SecuritiesInsider trading is the illegal practice of buying or selling securities based on material, non-public information, or tipping others to trade on such information. It violates securities laws and can result in civil and criminal penalties.
FINRA
GeneralFINRA (Financial Industry Regulatory Authority) is a self-regulatory organization that oversees broker-dealers and their registered representatives, administering qualification exams and enforcing securities rules.