Securities law regulates the sale and exchange of corporate investments. Known as blue sky laws, state securities statutes typically deter fraud and require broker and dealer registration.
A company’s securities are sold and bought on a stock exchange. To determine whether instruments qualify as securities, courts examine 성범죄전문변호사 the motivations of the buyer and seller, the plan of distribution, and other risk-reducing factors.
Definitions
Securities law deals with the rules and regulations that define what types of financial instruments are subject to federal and state laws governing their sale. The main goals of securities law are to protect investors and ensure the integrity of financial markets. These goals are accomplished by imposing requirements on issuers, brokers, and other market participants including disclosures and anti-fraud provisions. The recent financial scandals like Enron and MF Global have brought increased public interest in the issues of securities.
While securities are often referred to as stocks and bonds, the concept of what constitutes a security is much broader. It can include any instrument that carries some kind of ownership rights such as shares of stock in a corporation, treasury stock, security futures, securities-based swap, or debentures; or any instruments that fall under the broad definitions of investment contracts and equity.
The Supreme Court has established the basic definition of what constitutes a security as an instrument that carries ownership rights. Several factors are involved in determining whether something is considered a security, including its nature and expectations by investors, the form in which it is sold, and the purpose for which it is created (i.e., to raise capital). The Securities and Exchange Commission enforces a set of rules that regulate all sales, trades, and transfers of securities in the United States. FindLaw’s Securities Law section has extensive collections of primary and secondary sources, such as cases, statutes, regulation, no-action letters, and editorial commentary arranged by the specific act to which they relate.
Registration
In the United States, securities law is regulated by federal and state agencies. The federal Securities Act of 1933 requires companies to register their securities offerings with the SEC before making them publicly available. This process involves a comprehensive registration statement that provides both qualitative and quantitative information about the company, its business and management, and the securities being offered. Generally, a company must also name an agent for service and a U.S. duly authorized representative in its registration statement and have them both in place before filing with the SEC (a procedure known as “registration by coordination”).
A company may be exempt from the registration requirements of the federal securities laws if it uses the “means or instrumentalities” of interstate commerce to offer or sell the securities. However, that’s a broad category that almost always covers the offering of a security by means of a website or even through the mails.
Securities regulations require a variety of market participants to register with the SEC, including stock exchanges, brokers and dealers, investment advisers, transfer agents, clearing agencies, and other entities that deal in securities. These entities are required to file disclosures on a regular basis. The SEC also issues regulations and interpretive guidance regarding securities law. These are available through the EDGAR system, which is part of the SEC’s public website.
Disclosure
As a general rule, securities law imposes disclosure requirements for companies that want to go public. This means that all relevant information must be revealed about a business to its investors. This includes financial data and a detailed analysis of the company’s strengths, weaknesses, opportunities, and threats. This information must be updated regularly to reflect any changes in a business’s outlook.
Securities law also requires that statutory insiders disclose their equity ownership to avoid the potential of abuse of information. In addition, any person that makes false statements in a document under Section 16 of the Securities Exchange Act can be liable for damages.
State securities laws, known as blue sky laws, impose additional regulations on businesses selling securities in their jurisdictions. These regulations can include requirements for a firm to register, restrictions on broker-dealers’ dealings with clients, and sanctions against fraud.
Securities lawyers must be familiar with these laws to ensure that their clients’ investments are protected. The Silver Law Group has a number of attorneys who specialize in securities law and have won numerous verdicts and settlements for investors. Our lead attorney, Scott Silver, began his career defending Wall Street firms accused of securities fraud and now primarily represents individual investors. He is a frequent speaker on the subject of securities law and investment fraud and has written a popular primer on SEC whistleblower claims.
Trading
Securities make up a significant portion of many people’s retirement and investment portfolios. As such, the federal and state governments heavily regulate the industry through laws, such as The Securities Act of 1933 and The Securities Exchange Act of 1934. These laws authorize the Securities and Exchange Commission to establish additional regulatory controls over the industry. In addition, they allow private lawsuits against perpetrators of securities fraud.
A major focus of securities law is the definition of what constitutes a security. This involves deciding the difference between a piece of paper that represents an intangible interest in property or an ongoing enterprise and the actual tangible property itself. It also encompasses determining what kind of trading restrictions are appropriate for various types of securities. For example, directors, officers, and large stockholders are required to report their trades and have certain restrictions placed upon them regarding the amount of time that they can spend buying and selling company stocks.
A common issue that arises in this area is how to balance securities law with antitrust law. Some securities laws create conflicts with antitrust law, so a lawyer working in this area must be careful not to violate both laws. This is why most securities lawyers have an interest in business and may have spent their 1L summer at a bank, brokerage house, or investment management firm. The Supreme Court has ruled that if certain activities fall squarely within the scope of securities regulations, they can receive antitrust immunity.