Securities Acts
- A pair of laws dealing with the creation and exchange of financial securities. The initial law, termed the Securities Act, requires companies to register securities they offer with the relevant federal authority and to openly disclose all necessary information. This law exempts certain private, local, government-related, and small enterprises. The following law, namely the Securities Exchange Act, disallows the purchase of stocks without sufficient funds, supervises securities markets and brokers, sets out rules for gathering proxies, and restricts the misuse of non-public information when trading stocks. The responsibility of administering both laws resides with the Securities and Exchange Commission (SEC), which also acts as a legal advisor in corporate bankruptcy matters
- When a company decides to sell stocks, it has to adhere to the guidelines of the Securities Acts to ensure full disclosure of relevant information.
- The prohibition of buying stock without sufficient funds is a part of the Securities Acts enacted to ensure fair play in the trading market.
- In the event of corporate bankruptcy, the Securities Acts appoint the Securities and Exchange Commission to advise the court.
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