Securities Arbitration Law

Securities can include stocks, mutual funds, bonds, notes, CDs (certificates of deposit), any certificate of participation in a profit-sharing agreement, plus many other types of options on any index of securities. It could also include interests in oil, gas, mineral rights, investment contracts, annuities – the definition is incredibly broad and encompasses many things that many might not ordinarily consider a security at first glance.?

As a result of the Stock Market crash of 1929 and the Great Depression that followed, Congress enacted the Federal Securities laws and then created the SEC – the Securities and Exchange Commission - to administer them.?

There are two primary sets of rules that come into play when a company wants to offer securities for sale to its customers:

The Securities Act of 1933

The Exchange Act of 1934

The Securities Act governs new securities offerings. It requires companies to give investors full disclosure of all pertinent facts in order that they might intelligently make investment decisions. This Act is referred to as the "Truth in Securities" law. It clearly prohibits deceit, misrepresentation, and any form of fraud in the offer or sale of securities. It doesn't matter whether these securities are newly issued or are already outstanding.?

The Exchange Act requires that publicly held companies disclose information about their business operations on a continual basis. This includes financial conditions as well as management operations. This Act provides for those investors that trade publicly, such as those that trade over-the-counter or on exchanges. The Exchange Act prohibits brokerage firms and other companies from engaging in fraudulent, unfair practices, such insider trading and other sales practice abuses.

The Exchange Act also governs the conduct of those brokers and dealers who use exchanges like the New York Stock Exchange, the National Association of Securities Dealers, Inc., and other securities exchanges.?

Two other Acts to mention here are the Investment Company Act and the Advisers Act. The Investment Company Act governs activities of investment companies. These would include those who deal in mutual funds, those that serve primarily as a collective investment vehicle for others. The other is the Advisers Act, which establishes a model for regulating managers and advisers of investments. In many ways, this resembles the Exchange Act, in that it governs the conduct of securities brokers and dealers, and mainly requires that those compensated for advising others about these types of investments register with the Securities Exchange Commission. It also requires them to conform to certain standards which are designed to protect the investors.

The SEC requires companies offering new securities for sale to customers to issue a prospectus disclosing all pertinent information about it. If a prospectus contains false or misleading information, you have the right to recover your money from the issuing company and its underwriters. This is where Securities Arbitration lawyers come in. Federal securities law covers more than just the selling of bogus securities; fraud also covers the sale of legitimate securities for illegal purposes. There are many regulatory laws that must be complied with on both federal and state levels. If these laws aren't followed very carefully the broker can be charged with fraud. If you feel you have been the victim of fraud, or if you are concerned you may be out of compliance with some of the laws and need the help of a securities attorney, you should seek legal counsel sooner than later.