Valenti Hanley PLLC

Why must Kentucky companies register securities with the SEC?

A law that emerged out of the Great Depression still guides securities laws today.

The Securities of Act of 1933 has two core objectives: to see to it that investors are given necessary financial information about securities before they buy them and to keep securities from being sold through deceit, misrepresentation or other fraudulent acts.

To meet those goals, the Securities and Exchange Commission (SEC) requires that companies in Kentucky and throughout the United States disclose financial information by registering securities with the agency. By having the securities registered, investors can decide whether to buy.

The registration facts include:

  • A description of the company's business and its properties
  • A description of the security that is being listed for sale
  • Information about company management
  • Financial statements that have been certified by independent, not company, accountants

The SEC will make registration information public shortly after it is filed. Both foreign and domestic companies filed the information electronically, and prospective investors can access them that way.

There are some exemptions to the act:

  • Private offerings to a small group of investors
  • Offerings that are limited in size
  • Securities from governments: municipal, state and federal
  • Intrastate offerings

Registering securities accurately is a must for any company to do. The SEC routinely takes action against companies that haven't passed on important information or have given inaccurate information, to prospective investors. Any investor who loses money on a security has recourse if they can show the information provided was incomplete or false.

This is just a glimpse of the responsibilities of a company offering securities. An attorney with experience in securities can answer your questions.

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Valenti Hanley PLLC
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Louisville, KY 40202

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