General Overview
What are securities, according to the Act?
Securities include stocks, bonds, options, and other financial instruments that represent ownership or investment.
How does the Act help prevent fraud in the stock market?
It requires companies to provide accurate financial information and prohibits deceptive practices.
How does the Act regulate stock exchanges?
It requires stock exchanges to register with the SEC and follow fair trading rules.
How did the Act change the way stocks are traded?
It introduced stricter rules, increased oversight, and made trading more transparent.
Why was the Securities Exchange Act of 1934 created?
To prevent fraud, manipulation, and unfair trading practices in the stock market
Who must register with the SEC under this Act?
Public companies, stock exchanges, brokers, and dealers.
How does the Act affect public companies?
It requires them to disclose financial statements and other important business information.
How does the Act help prevent market manipulation?
It prohibits actions like spreading false information to influence stock prices.
What major event led to the creation of this Act?
The Stock Market Crash of 1929, which led to the Great Depression.
What is insider trading, and how does the Act regulate it?
Insider trading is buying or selling stocks based on confidential company information. The Act makes it illegal.
How does the SEC investigate potential violations?
It conducts audits, subpoenas records, and interviews witnesses.
What are proxy rules, and why are they important?
Proxy rules regulate how shareholders vote in company decisions, ensuring fairness.
What is the role of the Securities and Exchange Commission (SEC)?
The SEC enforces securities laws, monitors stock exchanges, and protects investors.
What is the difference between the Securities Act of 1933 and the Securities Exchange Act of 1934?
The 1933 Act regulates the initial sale of securities, while the 1934 Act regulates trading after securities are issued.
What is a cease-and-desist order, and when does the SEC use it?
It is an order to stop illegal activities immediately, used when violations occur.
What penalties exist for insider trading under this Act?
Fines, prison time (up to 20 years), and repayment of illegal profits.
What is Rule 10b-5, and why is it important?
It is an SEC rule that prohibits fraud and deception in the purchase or sale of securities.
What happens if a company violates the Act?
The SEC can fine the company, delist its stock, or take legal action.
Can individuals sue under the Securities Exchange Act of 1934?
Yes, investors can file lawsuits if they suffer losses due to fraud or violations.
How does the Act regulate broker-dealers?
It requires them to register with the SEC and follow ethical trading practices.