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?