Edited by Jerry Markham and Rigers Gjyshi
Chapter 3: The integrated disclosure system
The Securities Act of 1933 (“1933 Act”) followed the economic collapse of 1929 that led to the Great Depression. The goal of the 1933 Act was to ensure transparency in the financial system by mandating disclosures of material information to prospective investors through required securities registrations. The 1933 Act represented the first major involvement of the federal government in the regulation of securities offered for sale to the public, though certainly not the last. As the securities industry evolved, so did the regulatory arena under the 1933 Act. Generally speaking, the 1933 Act enables buyers and sellers of securities to make an informed decision by ensuring adequate disclosure of information and preventing purposeful manipulation of that information. In 1982, the SEC formally adopted the concept of integrated disclosure, which combined disclosures under the 1933 Act with those required under the Securities Exchange Act of 1934 (“1934 Act”). Some scholars had advocated for some time, with the main goal of revising or eliminating duplicative disclosure requirements with the hope of reducing the burden on registrants while still ensuring that market participants had access to adequate information. In 2005, the SEC adopted sweeping changes to registration and other requirements under the 1933 Act designed to further modernize the securities offering and communication processes. The goal behind the 2005 reforms was to shift the attention away from specific transactions and focus instead on company registration.
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