Securities Acts of 1933 and 1934
Lesson:
The Securities Act of 1933 and the Securities Exchange Act of 1934 are two important pieces of legislation that broadly cover the primary and secondary trading of stocks, bonds, and other securities in the USA.
They were enacted in response to the stock market crash of 1929 and the Great Depression.
- The Securities Act of 1933 governs the primary market (the initial issuance of stock).
- The Securities Exchange Act of 1934 governs the secondary market (the trading of securities that are already trading).
An easy way to remember which is which is that the first act (1933) focuses on the original (first) sale, and the second act (1934) focuses on the secondary market.
You're an accountant trying to understand which laws might be relevant to recent firm activities.
Here are the relevant facts:
- A major investor in a stock must notify authorities when their ownership exceeds a certain threshold.
Which securities act is most likely to apply in this case?
Answer:
- The Securities Exchange Act of 1934
Explanation:
-
The Securities Exchange Act of 1934 governs the secondary market (the trading of securities that are already trading).