Valenti Hanley PLLC

What is the Securities Act of 1933?

The Securities Act of 1933 was created to protect investors after the 1929 stock market crash. The point of this legislation was to make sure that financial statements would be more transparent, making it possible for investors to make more informed decisions. Additionally, laws were passed to prevent fraudulent acts and misrepresentation in the securities market.

The legislation began requiring companies to register with the Securities and Exchange Commission (SEC). This move guaranteed that all investors would receive a prospectus and registration statement.

What should a prospectus include?

A prospectus guarantees that investors get accurate information from a business before they invest in or subsidize it. A prospectus should include:

  • A description of the security that is being offered for sale
  • Financial statements verified and certified by independent accountants
  • Information about executive management
  • A description of the company's business and properties

Do all securities have to be SEC registered?

No, there are some exemptions. These include securities such as:

  • Private offerings granted to a limited amount of institutes or people
  • Limited size offerings
  • Intrastate offerings
  • Securities that are issued by the federal, state or municipal governments

As long as your company follows the guidelines set up by the federal government and the state of Kentucky, there should be no issues. However, some investors may be unhappy with the performance of stocks or securities and could accuse your business of fraudulent activities. If that happens, you should reach out to your attorney right away to begin defending your business and its reputation. These accusations can be extremely damaging, even if you're not convicted of wrongdoing, so don't wait to act.

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Valenti Hanley PLLC
401 West Main Street
Suite 1950
Louisville, KY 40202

Toll Free: 866-617-6209
Phone: 502-208-5017
Fax: 502-568-2101
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