40:
718:(or SRO). The NASD had primary responsibility for oversight of brokers and brokerage firms, and later, the NASDAQ stock market. In 1996, the SEC criticized the NASD for putting its interests as the operator of NASDAQ ahead of its responsibilities as the regulator, and the organization was split in two, one entity regulating the brokers and firms, the other regulating the
829:), bogus company sales to increase stock price, and even a company's failure to communicate relevant information to investors. Many plaintiffs in the securities litigation field plead violations of section 10(b) and Rule 10b-5 as a "catch-all" allegation, in addition to violations of the more specific antifraud provisions in the 1934 Act.
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market. Provided that the company has more than a certain number of shareholders and has a certain amount of assets (500 shareholders, above $ 10 million in assets, per Act sections 12, 13, and 15), the 1934 Act requires that issuers regularly file company information with the SEC on certain forms (the annual
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A specialized form of ATS, the
Electronic Communications Network (or ECN), has been described as the "black box" of securities trading. The ECN is a completely automated network, anonymously matching buy and sell orders. Many traders use one or more trading mechanisms (the exchanges, NASDAQ, and an
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Section 13(b)(3)(A) of the
Securities Exchange Act of 1934 provides that "with respect to matters concerning the national security of the United States", the President or the head of an Executive Branch agency may exempt companies from certain critical legal obligations. These obligations include
714:, which authorized the formation and registration of national securities associations. These groups would supervise the conduct of their members subject to the oversight of the SEC. The Maloney Act led to the creation of the National Association of Securities Dealers, Inc. – the NASD, which is a
751:
While the 1933 Act recognizes that timely information about the issuer is vital to effective pricing of securities, the 1933 Act's disclosure requirement (the registration statement and prospectus) is a one-time affair. The 1934 Act extends this requirement to securities traded in the secondary
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The 1934 Act also regulates broker-dealers without a status for trading securities. A telecommunications infrastructure has developed to provide for trading without a physical location. Previously these brokers would find stock prices through newspaper printings and conduct trades verbally by
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In the last 30 years, brokers have created two additional systems for trading securities. The alternative trading system, or ATS, is a quasi exchange where stocks are commonly purchased and sold through a smaller, private network of brokers, dealers, and other market participants. The ATS is
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keeping accurate "books, records, and accounts" and maintaining "a system of internal accounting controls sufficient" to ensure the propriety of financial transactions and the preparation of financial statements in compliance with "generally accepted accounting principles".
50:
An act to provide for the regulation of securities exchanges and of over-the-counter markets operating in interstate and foreign commerce and through the mails, to prevent inequitable and unfair practices on such exchanges and markets, and for other
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distinguished from exchanges and associations in that the volumes for ATS trades are comparatively low, and the trades tend to be controlled by a small number of brokers or dealers. ATS acts as a niche market, a private pool of liquidity.
677:, act as middlemen for the competing interests in the buying and selling of securities. An important function of the specialist is to inject liquidity and price continuity into the market. Some of the more well known exchanges include the
800:(b) To use or employ, in connection with the purchase or sale of any security registered on a national securities exchange or any security not so registered, or any securities-based swap agreement (as defined in section 206B of the
804:), any manipulative or deceptive device or contrivance in contravention of such rules and regulations as the Commission may prescribe as necessary or appropriate in the public interest or for the protection of investors.
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739:, an SEC regulation issued in the late 1990s, requires these small markets to 1) register as a broker with the NASD, 2) register as an exchange, or 3) operate as an unregulated ATS, staying under low trading caps.
764:. If something material happens with the company (change of CEO, change of auditing firm, destruction of a significant number of company assets), the SEC requires that the company issue within 4 business days an
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It shall be unlawful for any person, directly or indirectly, by the use of any means or instrumentality of interstate commerce or of the mails, or of any facility of any national securities exchange ...
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of those securities between persons often unrelated to the issuer, frequently through brokers or dealers. Trillions of dollars are made and lost each year through trading in the secondary market.
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ECN or ATS) to effect large buy or sell orders – conscious of the fact that overreliance on one market for a large trade is likely to unfavorably alter the trading price of the target security.
784:), when the 1934 Act was enacted, questions remained about the reach of that antifraud provision and whether a private right of action—that is, the right of an individual private citizen to
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an issuer of stock or related market actor, as opposed to government suits—existed for purchasers. As it developed, section 10(b) of the 1934 Act and corresponding
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638:) in the United States of America. A landmark piece of wide-ranging legislation, the Act of '34 and related statutes form the basis of regulation of the
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The breadth and utility of section 10(b) and Rule 10b-5 in the pursuit of securities litigation are significant. Rule 10b-5 has been employed to cover
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cases, but has also been used against companies for price fixing (artificially inflating or depressing stock prices through
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that they believe this is the first time a
President has ever delegated the authority to someone outside the Oval Office.
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have sweeping antifraud language. Section 10(b) of the Act (as amended) provides (in pertinent part):
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646:(SEC), the agency primarily responsible for enforcement of United States federal securities law.
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market. In 2007, the NASD merged with the NYSE (which had already taken over the AMEX), and the
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telephone. Today, a digital information network connects these brokers. This system is called
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1934 U.S. legislation establishing rules and regulatory bodies for financial markets
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Lin, Tom C. W. (April 16, 2012). "A Behavioral
Framework for Securities Risk".
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and their participants in the United States. The 1934 Act also established the
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1139:
Public Law 73-291, 73d
Congress, H.R. 9323: Securities Exchange Act of 1934
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Cox, James D.; Hillman, Robert W.; Langevoort, Donald C. (2009).
505:
Goldman Sachs Group, Inc. v. Arkansas
Teacher Retirement System
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Securities Lawyer's
Deskbook – Securities Exchange Act of 1934
196:
Economic Growth, Regulatory Relief and
Consumer Protection Act
845:, President Bush delegated authority under this section to
760:
filing). The filed reports are available to the public via
1001:
Dodd–Frank Wall Street Reform and
Consumer Protection Act
313:
Central Bank of Denver v. First
Interstate Bank of Denver
191:
Dodd–Frank Wall Street Reform and Consumer Protection Act
1118:
United States Securities and Exchange Commission (SEC)
1117:
833:
Exemptions from reporting because of national security
545:
Macquarie Infrastructure Corp. v. Moab Partners, L.P.
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While the 1933 Act contains an antifraud provision (
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List of financial regulatory authorities by country
768:filing that reflects these changed conditions (see
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525:Axon Enterprise, Inc. v. Federal Trade Commission
1096:Securities Exchange Act of 1934, as amended, in
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427:Credit Suisse Securities (USA) LLC v. Simmonds
389:Stoneridge Inv. Partners v. Scientific-Atlanta
1053:(6th ed.). Aspen Publishers. p. 11.
710:In 1938, the Exchange Act was amended by the
8:
1169:United States federal securities legislation
970:Garn–St. Germain Depository Institutions Act
32:
1124:Introduction to the Federal Securities Laws
982:Commodity Futures Modernization Act of 2000
446:Halliburton Co. v. Erica P. John Fund, Inc.
1154:United States federal criminal legislation
1051:Securities Regulation: Cases and Materials
868:Securities regulation in the United States
485:Liu v. Securities and Exchange Commission
1159:U.S. Securities and Exchange Commission
1133:University of Cincinnati College of Law
1065:"Intelligence Czar Can Waive SEC Rules"
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724:Financial Industry Regulatory Authority
649:Companies raise billions of dollars by
351:Wharf Holdings v. United Int'l Holdings
31:
932:Temporary National Economic Committee
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873:Commodity Futures Trading Commission
841:On May 5, 2006, in a notice in the
706:Self-regulatory organizations (SRO)
964:Securities Acts Amendments of 1975
644:Securities and Exchange Commission
592:Tooltip Public Law (United States)
95:Tooltip Public Law (United States)
25:
851:Director of National Intelligence
408:Matrixx Initiatives v. Siracusano
853:. Administration officials told
622:et seq.) is a law governing the
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18:Securities and Exchange Act 1934
1113:Statute Compilations collection
994:Credit Rating Agency Reform Act
945:Investment Advisers Act of 1940
571:Securities Exchange Act of 1934
332:Plaut v. Spendthrift Farm, Inc.
33:Securities Exchange Act of 1934
1071:. May 23, 2006. Archived from
951:Investment Company Act of 1940
1:
1023:Seattle University Law Review
808:Section 10(b) is codified at
133:15 U.S.C.: Commerce and Trade
716:Self-Regulatory Organization
1174:73rd United States Congress
959:(Securities Disclosure Act)
939:Trust Indenture Act of 1939
206:United States Supreme Court
75:73rd United States Congress
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275:Chiarella v. United States
218:Silver v. N.Y. Stock Exch.
756:filing and the quarterly
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653:in what is known as the
903:New York Stock Exchange
730:Other trading platforms
693:Securities associations
679:New York Stock Exchange
465:Salman v. United States
59:Securities Exchange Act
1030:. Rochester, NY: 325.
976:Gramm-Leach-Bliley Act
926:Securities Act of 1933
883:Chicago Stock Exchange
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802:Gramm–Leach–Bliley Act
659:Securities Act of 1933
657:. Contrasted with the
294:Basic Inc. v. Levinson
256:TSC Indus. v. Northway
237:J.I. Case Co. v. Borak
878:Securities commission
726:(FINRA) was created.
370:Dura Pharm. v. Broudo
172:Franklin D. Roosevelt
1164:1934 in American law
888:Financial regulation
776:Antifraud provisions
669:Securities exchanges
919:Related legislation
159:Legislative history
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988:Sarbanes–Oxley Act
913:Regulation D (SEC)
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651:issuing securities
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1079:October 9,
1008:References
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636:debentures
620:§ 78a
606:, enacted
598:, 48
468:, No.
150:§ 78a
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583:1934 Act
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