Act of 1934
What major event led to the creation of the Securities Exchange Act of 1934?
The 1929 stock market crash
How many commissioners lead the SEC, and who appoints them?
Five commissioners, appointed by the President
What is insider trading?
Buying or selling securities based on non-public, material information.
What federal agency was created by the Act to regulate the securities industry?
The Securities and Exchange Commission (SEC)
What type of financial reports must public companies file with the SEC?
10-K, 10-Q, and 8-K reports
Who was a famous individual convicted of insider trading?
Martha Stewart
What is the main purpose of the Securities Exchange Act of 1934?
To regulate the buying and selling of securities and protect investors from fraud and manipulation
What is the role of Self-Regulatory Organizations (SROs) in financial markets?
They enforce rules for fair trading and maintain market integrity.
What is Regulation Fair Disclosure (Reg FD), and what does it prevent?
It prevents selective disclosure of material information, ensuring all investors get the same updates at the same time.
Name one of the three key goals of the Act
Restore investor confidence, regulate securities trading, or create the SEC
What is margin trading, and how does the Act regulate it?
Borrowing money to buy securities; the Act limits how much can be borrowed to prevent excessive risk.
What are two ways the Act has impacted financial markets?
Increased transparency and trust, reduced fraud and manipulation.
What is a proxy solicitation, and why does the Act regulate it?
It involves soliciting shareholder votes, and the Act ensures transparency by requiring proxy materials to be filed with the SEC before solicitation.
What process must SROs follow before their rules take effect?
They must submit proposed rules for SEC review and public comment.
How does the Act balance regulation and economic growth?
It ensures market transparency and investor protection while allowing innovation and market expansion.