Introduction: Securities Regulation

Learning Objectives

After reading this chapter, you should understand the following:

  • The nature of securities regulation
  • The Securities Act of 1933 and the Securities Exchange Act of 1934
  • Liability under securities laws
  • What insider trading is and why it’s unlawful
  • Civil and criminal penalties for violations of securities laws

Both the registration and the trading of securities are highly regulated by the Securities and Exchange Commission (SEC). A violation of a securities law can lead to severe criminal and civil penalties. But first we examine the question, Why is there a need for securities regulation?