DEFINITION

• Securities Law balances efforts to sell innovative new business ideas to the investing public against full and fair risk disclosure.

• A security is an investment in a company that is premised upon the expectation of profits from the managerial or entrepreneurial efforts of others. Common types of securities are stocks, bonds and certificates of deposit.

• The federal Securities Laws are comprised of statutes, which in turn authorize regulations promulgated by the government agency with general oversight responsibility for the securities industry, the Securities and Exchange Commission (SEC).

• While the SEC, through its oversight of the various stock exchanges, is the main enforcer of the nation's securities laws, each individual state has its own securities regulatory body, typically known as the state securities commissioner. State securities regulators have most of their impact in the area of registration of securities brokers and dealers, and in the registration of securities transactions. These regulations are covered under the state's Blue Sky Laws.

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More information on Securities

RELATED PRACTICE AREAS

Business & Commercial Law
Banking & Finance Law
Antitrust & Trade Regulation
White-Collar Crime

BUZZWORDS

10-K - The name of the annual financial report required by the SEC of all publicly held corporations.

10-Q - A quarterly report that must be filed with the SEC by any company whose securities are traded on a national or over-the-counter market.

Blue Sky Laws - State statutes establishing standards for offering and selling securities. The purpose of these laws is to protect citizens from investing in fraudulent companies.

Bond - A long-term, interest-bearing debt instrument that is issued by a corporation or government entity.

Certificate of Deposit (CD) - A bank document that evidences the existence of a time deposit that normally pays interest.

Insider Trading - Transactions in shares of publicly held corporations by persons with inside or advance information on which the trading is based.

Securities and Exchange Commission (SEC) - The five-member board appointed by the president that regulates and oversees stock trading and enforces federal securities statutes.

Securities Act of 1933 - The federal securities act regulating the initial public offering (IPO) of securities. (15 U.S.C. Sec. 77)

Securities Act of 1934 - The federal securities act regulating the public trading of securities. This legislation established the Securities and Exchange Commission. (15 U.S.C. Sec. 78)

Shareholder - A person who owns stock in a corporation with certain legal rights attached.

Stock - Part of a corporation's capital, represented by the number of shares that one owns, granting the holder the right to participate in the company's general management and to share in its net earnings.

Venture Capital - Funding for new companies or others embarking on new ventures that entails some investment risk but offers the potential for above-average future profits.