What is the difference between Securities Act of 1933 and the Securities Exchange Act of 1934?

The Securities Act of 1933 (also known as the “Truth in Securities” Act) and the Securities Exchange Act of 1934 are two pieces of legislation that were established to combat fraudulent securities activities. Both acts were passed by the U.S. Congress in 1933 and 1934 respectively, in response to the stock market crash of 1929. The difference between the two laws are their primary areas of focus. The Securities Act of 1933 is focused on regulating the offer and sale of securities as opposed to regulating trading activities. As such, it requires companies to disclose any material information (which includes risk factors and financial statements) that investors should know before purchasing a security. This type of regulation is addressed by the “registration statement” which must be filed with the Securities and Exchange Commission (SEC) before any securities are sold. A company must also include the prospectus which is a condensed version of the registration statement that must be given to investors. On the other hand, the Securities Exchange Act of 1934 regulates trading activities in the secondary market and is focused on preventing market manipulation, insider trading, and other fraudulent activities. For example, the act requires companies listed on the stock exchange to disclose certain information regularly and imposes reporting requirements to increase transparency of trading activities. Both securities acts are important in California and nationwide as they provide important protections for investors and ensure the integrity of the securities markets.

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What is the difference between Securities Act of 1933 and the Securities Exchange Act of 1934?

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