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What is the purpose of the Securities Act of 1933?

On behalf of Law Office of Clifford J. Hunt, P.A. posted in securities registration filings on Thursday, September 6, 2018.

It is likely that some of the readers of this Florida securities and business law blog purchased something without having all of the information about the item. In some cases, the purchase may be just what they need, but in other cases, the item they receive may not be what they bargained for. Most individuals want to have the best information possible about the things they invest in so that they are sure they are using their money wisely.

In a similar vein, investors and purchasers of securities do the exact same thing, and the way that they learn more about the securities they may wish to purchase is through reviewing the financial and structural information offered by the entities that provide the securities. Entities that offer securities are required to provide specific information before those securities may be offered for public sale.  This requirement is one of the main purposes of the Securities Act of 1933.  The disclosure requirements are set forth in Securities and Exchange Commission (“SEC”) Regulation S-X and are included in a registration statement and prospectus that is filed with and reviewed by the SEC.  The most common registration used by issuing entities is SEC Form S-1.

The Act exists to make sure that individuals know what they are getting before they buy securities on the public market. It discourages entities from engaging in misrepresentation or deceit when they offer securities for purchase. Through securities registration filings entities disclose important information so that investors may make informed decisions about their intended purchases.

All investors should be aware of how to find and interpret the information that entities publish regarding their securities offerings, and entities that wish to sell securities should understand just what they are liable to disclose when they make a securities registration filing. Attorneys who practice securities law may be consulted by all parties who may work with or may create these unique financial and legal documents.

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