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Securities law forms the backbone of corporate accountability in the United States, and you're being tested on how these regulations work together to create a system of disclosure, registration, and enforcement. Understanding these laws isn't just about memorizing dates and acronyms—it's about recognizing why each regulation exists, what problem it solved, and how it shapes management decision-making today. Every major securities statute emerged from a crisis or gap in investor protection, so knowing the historical trigger helps you understand the law's purpose.
On your exam, expect questions that ask you to identify which regulation applies to a given scenario, compare the scope of different acts, or explain how disclosure requirements protect investors. Don't just memorize the year each law passed—know what market failure or scandal prompted it, what entities it regulates, and what obligations it creates for managers. The conceptual thread running through all of these is the tension between capital formation (making it easy to raise money) and investor protection (preventing fraud and ensuring transparency).
These Depression-era statutes established the basic framework requiring companies to tell the truth before and after they sell securities to the public. The core principle: sunlight is the best disinfectant.
Compare: Securities Act of 1933 vs. Securities Exchange Act of 1934—both require disclosure, but the '33 Act governs initial offerings while the '34 Act governs ongoing reporting for already-public companies. If an FRQ asks about IPO requirements, focus on the '33 Act; if it asks about quarterly filings, that's the '34 Act.
These companion statutes from 1940 regulate the intermediaries who manage other people's money, imposing registration requirements and fiduciary standards.
Compare: Investment Company Act vs. Investment Advisers Act—both from 1940, but the former regulates funds (the products) while the latter regulates advisers (the people giving advice). Remember: companies vs. individuals.
Major corporate failures and financial crises prompted Congress to strengthen accountability mechanisms. Each of these laws is a direct response to specific market failures.
Compare: Sarbanes-Oxley vs. Dodd-Frank—both are crisis-response legislation, but SOX targeted corporate accounting fraud while Dodd-Frank addressed systemic financial risk. SOX focuses on individual company accountability; Dodd-Frank focuses on market-wide stability.
Not all securities regulation restricts—some laws ease burdens to encourage economic growth and broaden investment opportunities.
Compare: JOBS Act vs. traditional registration requirements—the JOBS Act creates exceptions to the standard disclosure regime to help smaller companies access capital. Exam tip: if a question involves a startup or crowdfunding, think JOBS Act first.
These rules ensure that no market participant gains unfair advantage through access to non-public information.
Compare: Insider trading rules vs. general disclosure requirements—both promote market fairness, but disclosure rules require affirmative sharing of information while insider trading rules prohibit acting on information that hasn't been shared. One is about what you must tell; the other is about what you can't use.
| Concept | Best Examples |
|---|---|
| Initial offering regulation | Securities Act of 1933, Registration requirements |
| Ongoing disclosure | Securities Exchange Act of 1934, Disclosure requirements for public companies |
| Investment intermediary regulation | Investment Company Act of 1940, Investment Advisers Act of 1940 |
| Crisis-response reform | Sarbanes-Oxley Act of 2002, Dodd-Frank Act of 2010 |
| Capital formation incentives | JOBS Act of 2012 |
| Market integrity | Insider trading regulations |
| Fiduciary obligations | Investment Advisers Act of 1940, Sarbanes-Oxley (CEO/CFO certification) |
| Consumer protection | Dodd-Frank Act (CFPB) |
Which two statutes both emerged from 1940 and regulate the investment industry—and what's the key distinction between what each regulates?
A company is preparing to sell stock to the public for the first time. Which statute primarily governs this transaction, and what document must the company provide to potential investors?
Compare and contrast Sarbanes-Oxley and Dodd-Frank: What crisis prompted each, and what's the primary focus of each law's reforms?
An executive learns that her company will announce disappointing earnings next week and sells her shares before the announcement. Which regulatory framework addresses this conduct, and what are the potential consequences?
How does the JOBS Act of 2012 represent a different regulatory philosophy than the Securities Act of 1933, and what types of companies benefit most from its provisions?