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 4: Exemptions from 1933 Act registration

Thomas L. Hazen

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


Section 5 of the Securities Act of 1933, which contains the basic prohibition against offers and sales without registration, explicitly applies on its face to all offers and all sales of any security. This broadly drafted prohibition is thus presumptively applicable to all securities transactions. However, most transactions that take place on a daily basis are not subject to Section 5’s prohibitions and the registration requirements. This is because the 1933 Act provides a number of exemptions from the operation of Section 5 and, hence, from its registration requirements. There are three statutory bases for exemption from the 1933 Act’s registration provisions. Keep in mind that, to a large extent, the exemptions provide only an exemption from the Act’s registration requirements and thus do not affect the antifraud provisions. Section 3 of the 1933 Act sets forth various categories of securities that are exempt from registration. Section 4 of the 1933 Act describes a variety of transactions that qualify for an exemption from registration. Section 28 of the 1933 Act gives the SEC broad exemptive rulemaking power beyond that granted by the statutory exemptions in Sections 3 and 4 of the 1933 Act. Notwithstanding the broad exemptive authority granted by Section 28, virtually all of the exemptions are grounded in Section 3 or 4. One must read an exemptive rule under Section 3 or 4 in conjunction with the terms of the statute because, in order to be valid, the rule must fall within the bounds that the statute authorizes.

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