Investing Answers Building and Protecting Your Wealth through Education Publisher of The Next Banks That Could Fail
Investing Answers Building and Protecting Your Wealth through Education Publisher of The Next Banks That Could Fail

Securities Act of 1933

What it is:

The Securities Act of 1933 was the first law passed that imposed regulations on the securities industry following the stock market crash of 1929.

How it works (Example):

The stock market crash of 1929 resulted from more than a decade of unsavory and imprudent business and investment practices. Investors subsequently sold off their holdings in a panic as consumer and investor confidence tumbled. As the market began to recover in 1933, the U.S. Congress passed the Securities Act in an effort to jump-start the financial markets by restoring Americans' belief in the banking and capital market system.

The Securities Act of 1933 was passed by Congress with two basic aims. First, it required that companies issuing financial securities fully disclose all relevant information to its investors and prospective investors. Secondly, it established ethical standards for issuing companies that they register with the Securities Exchange Commission (SEC) and suffer penalties for any form of fraud.

Why it Matters:

Passed in the wake of a debilitating economic downturn and a time of record lows in consumer and investor confidence, the Securities Act of 1933 was essential in rebuilding confidence in the economic and financial system at a time when a shattered country was just beginning to recover. 

Related Terms View All
  • Auction Market
    Though most of the trading is done via computer, auction markets can also be operated via...
  • Best Execution
    Let's assume you place an order to buy 100 shares of Company XYZ stock. The current quote...
  • Book-Entry Savings Bond
    Savings bonds are bonds issued by the U.S. government at face values ranging from $50 to...
  • Break-Even Point
    The basic idea behind break-even point is to calculate the point at which revenues begin...
  • Calendar Year
    If Company XYZ starts its fiscal year on January 1 and ends its fiscal year on December...