What are the rules governing the sale of securities in the United States?
The rules governing the sale of securities in the United States are set by the Securities and Exchange Commission (SEC). The SEC was created to protect investors and to ensure a fair and orderly functioning of the securities markets. In order for a security to be offered for sale to the public, the company offering the security must register it with the SEC. This registration process requires disclosure of key information about the company to the public, such as financial statements, management information, and other pertinent details. This allows prospective investors to make an informed decision about whether to invest in the company. Once the security is registered and approved by the SEC, the company offering the security must comply with all the regulations imposed by the commission. For example, a prospectus must be prepared and distributed to all potential investors. Furthermore, the securities must be sold through a broker-dealer who is registered with the SEC. This ensures that all investors are protected from fraud. Finally, the SEC requires ongoing disclosure of information to the public. This includes regular financial statements, corporate events, and other pertinent information that would affect the security. Through all these rules, the SEC attempts to protect investors by ensuring that information about securities is available to the public and that they are sold in a fair and orderly manner.
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