Securities Act of 1933 is also referred as the “truth in securities” law, the Securities Act of 1933
has two basic objectives:
require that investors receive financial and other significant information concerning securities
being offered for public sale; and
prohibit deceit, misrepresentations, and other fraud in the sale of securities.
Purpose of the Registration:
A primary means of accomplishing these goals is the disclosure of important financial
information through the registration of securities. This information enables investors, not the
government, to make informed judgments about whether to purchase a company’s securities. While the
SEC requires that the information provided be accurate, it does not guarantee it. Investors who
purchase securities and suffer losses have important recovery rights if they can prove that there was
incomplete or inaccurate disclosure of important information.
The Securities Act of 1933 (P.L. 73-22, 48 Stat. 74) was the first federal legislation specifically
intended to regulate a company’s sale of securities (i.e., stocks and bonds). The act required that all
sales of securities be registered with the government unless there was a specific exemption to the
contrary. The process of registration included the submission of a prospectus, a disclosure document
that states all material facts relating to the securities and the company issuing them. The acts provided
remedies for investors who are misled regarding the securities, or who purchase securities that should
be registered but are not. The act also included civil and criminal penalties for violating its provisions.
Securities Investment Trust Act