Investment Laws

Federal regulations protect the investor

Investment laws are intended to protect the investor. Since the days of the Great Depression, the federal government has regulated the financial industry. With the Securities Act of 1933, the government:

Required that investors receive financial and other significant information about securities offered for public sale
Prohibited deceit, misrepresentations, and other fraud in the sale of securities

To comply with the Act, companies must register their securities. If investors who purchase securities suffer losses, they have right to recover damages if they can prove incomplete or inaccurate disclosure of important information.

The Securities Exchange Act of 1934

The Securities Exchange Act of 1934 established the Securities and Exchange Commission (SEC) to regulate the securities industry, including authority to register, regulate, and oversee brokerage firms, transfer agents, and clearing agencies in addition to the country’s self-regulatory organizations (SROs). The Act also governs disclosure in materials sent to shareholders to gain votes in annual or special meetings to elect directors and approve corporate action.

The Investment Advisers Act of 1940

The Investment Advisers Act of 1940 requires investment firms and individual investment advisers to register with the SEC and comply with regulations designed to protect the investor. The Investment Advisor Act was amended in 1996 and requires advisers managing at least $25 million of assets to register with the SEC.

The most recent investment law enacted is the Sarbanes-Oxley Act of 2002. This law focuses on corporate responsibility, financial disclosure, and corporate and accounting fraud.

State Blue Sky Laws provide further investor protection

Each of our 50 states has a set of investment laws to govern securities. These are called Blue Sky Laws. In general, they prohibit fraud, require investment adviser registration, and require full disclosure of information to the investor.

The North American Securities Administrators Association also protects investors

In addition, the North American Securities Administrators Association (NASAA) is devoted to investor protection. Members of this association investigate violations of state and federal law, file enforcement actions, and educate the public about investment fraud. NASAA also advocates an investor bill of rights.

Links of interest

SEC—The Laws that Govern the Securities Industry

For more detailed information please visit our Investment Law Center

The Willeford Law Firm—the investor’s choice for legal recovery of financial loss

Investment laws are meant to protect you. If you believe you lost money in an investment through your broker’s or brokerage firm’s wrongdoing, contact the investment attorneys of The Willeford Law Firm to claim recovery. We represent investors and guide you through the claims process, reducing your emotional and financial stress.

Call our securities lawyers at 1-800-706-5196 to schedule your free consultation or use the online form to tell us about your situation.