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Wiley CPAexcel Exam Review 2014 Focus Notes: Regulation by Wiley

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Module 24: Federal Securities Acts

FEDERAL SECURITIES REGULATIONS

Securities Act of 1933 (33 Act)

The 33 Act requires

  • Registration of securities offered for sale to the public
  • Information be provided as part of that registration

Nonexempt securities must be registered before being offered to sale to the public

  • Through the mails
  • In interstate commerce

Registration consists of a registration statement, which includes the prospectus

  • The registration statement describes the use of proceeds and contains audited financial statements
  • The prospectus describes the securities, the company, and the risk

Once registration statement is filed

  1. 1)   Oral offers to sell shares may be made
  2. 2)   20 day waiting period before registration is effective
  3. 3)   During waiting period company may obtain an underwriter and issue a “red herring” (preliminary prospectus)
  4. 4)   After waiting period, securities can be bought and sold
  5. 5)   After waiting period, a tombstone ad informs investors about obtaining prospectus

In addition to federal registration laws, states require registration under “blue-sky laws

Securities Exempt from Registration

Certain securities are exempt from registration. The 1933 Act doesn't apply to these securities at all.

Exempt securities include

  • Government securities
  • Regulated by federal agency (banks and railroads)
  • Insurance policy
  • Nonprofit organization
  • Debt maturing within 9 months (known as commercial paper)

Transactions Exempt from Registration

Certain transactions may ...

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