A security is simply defined as the documentation of either ownership or debt that can be given a monetary value for the purpose of selling these items for profit-sharing. Often securities are sold through the stock exchange. Securites are regulated by numerous laws. Legislation is in place to prevent financial firms from taking irresponsible risks. There is no greater example of risk-taking by financial firms and the misuse of securities that than of the 2008 financial crisis in the United States. See the best information about financial regulation at chris brummer.
Know These Five Laws That Regulate Securities.
Securities sold to the public cannot misrepresent the truth or be sold fraudulently. A year after Congress established the Securities Act of 1933, it implemented the Securities and Exchange Commission. The SEC not only governs securities but it also can take legal action against individuals who misrepresent securities on the various U.S. stock exchanges.
The Securities Exchange Act of 1934 not only established the SEC. The Act prohibits insider trading, the practice of buying or selling a security by an individual who has information on that security that is not shared with the public. In a further effort to promote disclosure within the financial industry, Congress passed the Investment Company Act of 1940. The Act says a company cannot sell their stock unless they disclose the general financial status of the company. This also includes the company's investment activity. Learn more about chris brummer.
Trends in securities law
Financial firms are not the only entities catalogued at the SEC. By 1940, Congress was mandating that advisers compensated for their investment advice should also be registered with the SEC.Although initially enacted by Congress more than a half century ago, the Act was amended in 1996 and 2010 to only include advisers who have more than $100 million in assets.
In recent years, the government has sought to regulate the professional behaviors of auditors with the Public Company Accounting Oversight Board.
Maybe the most radical change to financial regulations since the 1940s was the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010. The act would protect consumers, regulate credit ratings, and call for greater transparency, among other stipulations. Acquire more knowledge of this information about financial regulation at https://en.wikipedia.org/wiki/Financial_regulation.
The future of financial regulations might be complicated by the latest onslaught of technology. Take Bitcoin. Bitcoin is a cryptocurrency, or a type of electronic cash, that can be difficult to legislate. Chris Brummer, director of Georgetown's Institute of International Economic Law, says the cryptocurrency will be difficult to use within our existing financial system. Brummer has stated that the origins of Initial Coin Offerings are not always identifiable, making it impossible for investors to keep track of fraud.
Regulating cryptocurrencies will pose new challenges for governments of the future.