Research Handbook on Securities Regulation in the United States

Research Handbook on Securities Regulation in the United States

Research Handbooks in Financial Law series

Edited by Jerry Markham and Rigers Gjyshi

This fascinating Handbook provides a clear explanation of the securities market regulation regime in the United States. A diverse set of contributors offer a comprehensive overview of the regulatory process, Dodd-Frank, the principal securities statutes, and the regulators and market participants involved. In addition to a general summary of the topic, this volume provides detailed explanations of the process for registering securities, exemptions from registration, secondary distributions, and the underwriting process. Scholars and students of financial law, banking and regulatory law will find this book a useful resource, as will attorneys, compliance professionals, risk-mitigation professionals and corporate leaders.

Chapter 1: Overview

Jerry W. Markham

Subjects: economics and finance, financial economics and regulation, law - academic, finance and banking law


The federal securities laws that now govern the regulation of securities markets in the U.S. are largely based on legislation that was passed in the wake of the Stock Market Crash of 1929 and in the midst of the Great Depression. The passage of those statutes was preceded by lengthy Congressional investigations that uncovered numerous abusive trading practices and widespread fraud. Those congressional investigations resulted in the passage of five statutes that now comprise the legislation that, after many amendments, still regulates the securities markets. The statutes are commonly referred to as the “federal securities laws” and include the Securities Act of 1933 (“1933 Act”), the Securities Exchange Act of 1934 (“1934 Act”), the Investment Advisers Act of 1940 (“1940 Act”), the Investment Company Act of 1940, and the little noticed Trust Indenture Act of 1939. The 1933 Act regulates public offerings of securities. That statute is modeled after earlier English legislation that sought to regulate public companies through the disclosure of their operations and finance. The federal securities laws also embrace the views of Justice Louis Brandeis who stated that “publicity is justly commended as a remedy for social and industrial diseases. Sunlight is said to be the best of disinfectants; electric light the most efficient policeman.” The 1933 Act also added “to the ancient rule of caveat emptor, the further doctrine ‘let the seller also beware.’” The 1933 Act prohibits the public sale of securities that are not registered with the Securities and Exchange Commission (“SEC”), unless they are exempted from that requirement.