The Securities Act of 1933 requires the disclosure of material information (any pertinent facts that an average investor would need to make an informed decision about whether or not to invest money in a security).
The Investment Advisers Act of 1940 requires investment advisers to disclose conflicts of interests. For example, an adviser must disclose whether or not they have an interest in the securities they are selling to investors.
Blue Sky Laws are securities laws that were enacted as a result of fraud cases involving unsuspecting investors who were promised high returns on their investments. The investors were said to have fallen victim to fraudulent offers that promised a "piece of the great blue sky". To combat this widespread problem, Kansas and other states began regulating the issuance and sale of securities within their jurisdictions.
The Sarbanes Oxley Act of 2002 attempts to improve corporate governance and accountability by imposing regulations on public accounting firms and corporate executives. Both criminal and civil sanctions can be imposed for violations of the act.
The Clayton Act specifically prohibits anti-competitive or monopolistic behavior. The Clayton Act Congress enacted the Clayton Act as a way to further strengthen antitrust laws, such as the Sherman Act. The Sherman Act prohibits anti-competitive behavior in interstate commerce. The Clayton requires a probable adverse impact on competition. A party charged with violating the Clayton Act must therefore rebut the argument of a probability of an adverse impact. The Clayton Act prohibits:
To review, watch "Federal Securities Regulation in the United States", "State Securities Regulation in the United States", and "The Sarbanes-Oxley Act", and read section "48.1: History and Basic Framework of Antitrust Laws in the United States".
The Securities and Exchange Commission (SEC) issues rules that regulate the sale of securities. The Securities and Exchange Commission requires companies to register their securities statements and filings. The agency also has an annual reporting and filing requirement to ensure full disclosure by companies selling securities.
The Securities and Exchange Commission can enforce its agency rules related to securities statutes and impose penalties (such as fines) for non-compliance. The Securities and Exchange Commission has the power to conduct administrative hearings through which it can impose sanctions on violators. For example, it can suspend a securities dealer's license for misconduct.
To review, watch "Federal Securities Regulation in the United States".
The Federal Trade Commission (FTC) supports antitrust law by regulating business trade practices. The FTC is authorized by Congress to make "trade regulation rules" which set forth industry specific fair trade practices. The FTC specifically prohibits unfair or deceptive trade practices. The FTC is empowered to enforce antitrust laws through cease and desist orders. It can only impose civil penalties for violations. To review, read section "48.1: History and Basic Framework of Antitrust Laws in the United States".
This vocabulary list includes terms that might help you with the review items above and some terms you should be familiar with to be successful in completing the final exam for the course.
Try to think of the reason why each term is included.