The Securities Exchange Act of 1934

The Securities Exchange Act of 1934 is a pivotal piece of U.S. federal securities legislation that was enacted in response to the stock market crash of 1929 and the subsequent Great Depression. This act established the regulatory framework for securities markets and governs various aspects of securities trading, including the operation of securities exchanges, securities brokers and dealers, and ongoing reporting requirements for publicly traded companies.

Key components and provisions of the Securities Exchange Act of 1934 include:

• Establishment of the Securities and Exchange Commission (SEC): The act created the SEC as the primary regulatory agency overseeing the securities industry. The SEC is tasked with enforcing securities laws, regulating securities exchanges, and protecting investors.

• Registration and Regulation of Securities Exchanges: The 1934 Act requires securities exchanges, such as the New York Stock Exchange (NYSE) and Nasdaq, to register with the SEC and comply with certain regulatory standards. These standards include rules governing trading practices, listing requirements for securities, and procedures for handling customer orders.

• Regulation of Securities Brokers and Dealers: The act regulates the activities of securities brokers and dealers, requiring them to register with the SEC and adhere to certain standards of conduct. It establishes requirements for fair dealing, disclosure of material information to customers, and the handling of customer assets.

• Anti-Fraud Provisions: The Securities Exchange Act of 1934 includes anti-fraud provisions aimed at preventing fraudulent or manipulative practices in the securities markets. These provisions prohibit activities such as insider trading, market manipulation, and false or misleading statements in connection with securities trading.

• Ongoing Reporting Requirements: The act imposes ongoing reporting requirements on publicly traded companies, requiring them to file periodic reports with the SEC. These reports include annual financial statements, quarterly reports, and other disclosures of material information to investors. The goal is to ensure transparency and provide investors with timely and accurate information about the financial condition and performance of publicly traded companies.

• Regulation of Insider Trading: The act prohibits insider trading, which involves trading securities based on material, non-public information. It requires insiders, such as corporate officers, directors, and large shareholders, to disclose their transactions in company stock and prohibits them from trading on material, non-public information.

Overall, the Securities Exchange Act of 1934 plays a crucial role in regulating securities markets and promoting transparency, fairness, and investor protection. It remains one of the cornerstone pieces of U.S. securities law and has been amended and expanded over the years to address evolving market dynamics and investor needs.

See The Securities Act of 1933, The Exchange Act of 1934, The Trust Indenture Act of 1939, The Investment Advisers Act of 1940, The Investment Company Act of 1940, and Regulations S-K and S-X. See also Other Federal Securities Laws and Rules.