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