What are the rules governing the sale of securities in the United States?

In the United States, the sale of securities is governed by the Securities Act of 1933, commonly referred to as the “Truth in Securities” law. This law, which is designed to protect investors from fraudulent stock offerings, requires companies to disclose material facts about the security when they offer it for sale. A material fact is any information that could reasonably be expected to affect the value of the security. In addition, the Securities Act of 1933 requires any security to be registered with the Securities and Exchange Commission (SEC). This requires the issuer to provide details about the company, the offering, and the risk associated with the security. Potential investors can review this information before making a decision to invest. The SEC also has rules that require certain companies to have their financial statements audited by an independent auditor. This provides investors with an additional layer of protection and assurance that the company’s financial statements are accurate and reflect the true financial condition of the company. In addition to federal regulations, individual states, like Washington, may also have laws governing the sale of securities. These state laws must be followed in addition to federal laws. Overall, the federal and state rules governing the sale of securities in the United States are designed to protect investors. By requiring registration of securities, knowledge of material facts, and independent auditing of financial statements, the laws help reduce the risk of fraudulent activity.

Related FAQs

How do the principles of contract law apply to electronic contracts?
What are some of the issues related to taxation in business transactions?
What are some of the remedies available to parties to a contract who breach their obligations?
What are the advantages and disadvantages of partnerships?
What types of documents are used to transfer title to real property?
What is the distinction between real property and personal property?
What are the types of items that can be secured by a security interest?
What is the scope of the corporate veil and how does it affect creditors?
What is a shareholders' agreement?
What are the federal laws governing business transactions?

What are the rules governing the sale of securities in the United States?

Related FAQs

Related Blog Posts