Global Securities Markets: Navigating the World's Exchanges and OTC Markets

THE PILLARS OF U.S. FEDERAL SECURITIES LAW

There were six pillars of securities reform enacted during the wake of the Great Depression. Four are still actively in play in today's brokerage community—the Securities Act of 1933 (the 1933 Act, governing the new issue of securities), the Securities Exchange Act of 1934 (the 1934 Act, governing securities exchanges, the licensing of brokers, periodic reporting by issuers and other miscellaneous securities market concerns), the Investment Advisers Act of 1940 (the Advisers Act, governing those who provide investment advice for a fee), and the Investment Company Act of 1940 (the 1940 Act, governing investment funds, primarily those sold to the public such as mutual funds). Each of these laws will be examined below.

The remaining two acts deserve brief mention for completeness. Somewhat less well known, but still perhaps one of the most important of the six major securities laws passed in the United States at the end of the Great Depression, is the Trust Indenture Act of 1939. This act governs the functions of the custodial banks that perform the role of paying agents and trustees in connection with corporate and government debt. The remaining act was the Public Utility Holding Company Act.8

The following is a brief summary of the principal features of the acts relevant today to the brokerage community.9

Securities Act of 1933

This Act applies primarily to the initial offering of securities by issuers as opposed to secondary market trading. ...