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Understanding laws governing securities in the U.S.

Investors in Texas may benefit from understanding more about the laws that govern the securities industries. Many of these laws are enforced by the U.S. Securities and Exchange Commission. The Securities Act of 1933 is the first law cited by the SEC that governs the fundamentals of investing in America. This act is known to many as the 'truth in securities" law, and it prohibits misrepresentations, fraud and deceit in securities trading and guarantees investors the right to receive financial and other relevant information regarding securities available for public sale.

Securities sold in America must be registered. To register, companies are required to submit financial statements that have been certified by independent accountants, information about management, a description of the securities for sale, as well as a description of the company's properties and operations. Registration statements are subject to public review to ensure compliance with requirements of disclosure. The offerings that are exempt from registration include securities of government entities, intrastate securities, limited-sized securities and private securities available to a limited number of investors.

The Securities Exchange Act of 1934 created the SEC and empowered the federal agency to register, regulate and monitor America's self-regulatory organizations like the NASDAQ Stock Market and the New York Stock Exchange, in addition to clearing agencies, transfer agents and brokerage firms. The SEC also has the authority to discipline individuals or entities who participate in misconduct that is prohibited by securities laws.

Businesses who need assistance with securities compliance often rely heavily on legal counsel. Lawyers who have experience with securities law may able to assist companies with preparing for an initial public offering or could provide ongoing compliance with SEC regulations. These lawyers may also be able to assist management with preparing quarterly and annual SEC reports.

Source: U.S. Securities and Exchange Commission, "The Laws That Govern the Securities Industry", September 29, 2014

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