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 thecrash of 1929.
How It Works/Example:
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.crash of 1929 resulted from more than a decade of unsavory and imprudent business and practices. Investors subsequently sold off their holdings in a panic as consumer and investor confidence tumbled. As the
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.