What is the Securities Act of 1933?Is it the same as the SEC?

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Ashley Kannan | Middle School Teacher | (Level 3) Distinguished Educator

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Both the Securities Act and the government office intended to enforce it represented lessons learnt from the stock market speculation of the 1920s.  The Securities Act and SEC were both designed to implement more transparency in the affairs and manners in which stock was purchased and in which stock transactions were conducted.  The idea here is that the notion of excessive purchasing on margin calls as well as the entire process in which stock speculation had artificially inflated stock profits and the market, in general, required reform.  Both the Act and the commission were designed to bring about a sense of reform to both the marketplace, the individuals who participated in it, and also protect the investor who was more susceptible to deception and unfair business practices.

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pohnpei397 | College Teacher | (Level 3) Distinguished Educator

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Yes, it is pretty much the same thing.  This law was meant to regulate the sale of securities (stocks, etc).  The point of it was to try to protect investors from fraud.

This law had two main goals.  First, it was supposed to make sure that the public (potential investors) got legitimate information about securities that were being offered for sale to the public.  The second goal was to prohibit sellers from deceiving or defrauding the public when they sold securities.

The SEC itself was not created until the next year, but the 1933 law gave the government the right to do much of what the SEC does.

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dbello | High School Teacher | (Level 1) Educator

Posted on

The Securities Exchange Act of 1933 provided a one time protection regarding securities transactions, however the 1934 Act provided further protection on the secondary market (public ) after the initial issue of the stock was given. The firms that were listed on an exchange must adhere to a series of regulations, among them disclosure of financial statements, audits,  regulations regarding the exchanges and the broker, as well as buying on 'margin'. The 1933 Act's anti fraud procedures were strengthened in the 1934 Act to include on going monitoring of the financial markets. From the 1934 Act the Securities and Exchange Commission was created to protect the investor and safeguard the economic stability of the nation.

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