Government Regulations of Business

Government Regulations of Business

Rebecca DeGroff

Grand Canyon University

Government Regulations of Business

Securities regulation has been around for many years. In 1911, Kansas enacted the first regulation requiring registration of both securities and their salesmen in response to investors being taken by worthless interests in fly-by-night companies. By 1913 twenty three other states had joined Kentucky in passing some sort of securities regulation. In 1929 the Uniform Securities Act was enacted in order to bring uniformity to the state regulations but it repealed in 1944 (Wisconsin Department of Financial Institutions, n.d., p. 1). In response to the stock market crash of 1929 the first major federal securities legislation was enacted, The Securities Act of 1933. Soon to follow was the Exchange Act of 1934 (Wisconsin Department of Financial Institutions, n.d.). In 2002, the Sarbanes-Oxley Act (SOX) was created due to the scandals of the early 21st century (Mallor, Barnes, Bowers, & Langvardt, 2010, p. 159). This work will summarize these securities acts, contrast and compare them, and discuss how they are used today.

Summary of the Securities Acts

The Securities Act of 1933 has two basic objectives: to require that investors receive financial and other significant information concerning securities being offered for public sale; and to prohibit deceit, misrepresentations, and other fraud in the sale of securities (US Securities and Exchange Commission, 2010, p. 1). This Act requires that securities sold in the US must be registered. The registration forms ask for a description of the company's properties and business, a description of the security to be offered for sale, information about the management of the company, and financial statements certified by independent accountants (US Securities and Exchange Commission, 2010, p. 1-2). There are certain exemptions from this registration requirement for some security offerings. They...