Congress passed the Securities Exchange Act of 1934, formally creating the Securities and Exchange Commission. The Act provides the SEC with wide authority over all areas of the securities sector. This means the SEC can register, regulate, and supervise transfer agents, clearing agencies, self regulatory organizations (SROs), and brokerage firms. The NASDAQ Stock Market and the New York Stock Exchange are both SROs, along with the Chicago Board of Options and the Financial Industry Regulatory Authority (FINRA).
The Act also names and bans certain kinds of market behavior and provides the Commission disciplinary authority above regulated entities and everyone who is associated with them.
Moreover, the Act gives the SEC authority to require companies with publicly traded securities to submit reports on a regular basis.
Companies that own assets in excess of $10 million and whose securities are held by no less than 500 owners have to file reports yearly along with other needed periodic reports. Such reports are made public through the EDGAR database of the SEC.
The Securities Exchange Act also has power over the disclosure in materials intended to win shareholders' votes in annual or other meetings set for electing directors and approving of other corporate action. The information, found in proxy materials, has to be filed with the Commission prior to any solicitation to make sure that disclosure rules are followed. Management or shareholder group solicitations alike have to provide all important information affecting the issues on which there will be a vote. Learn more from https://chrisbrummer.com/.
According to the Securities Exchange Act, anyone who wants more than 5 percent of a company's securities, either by tender offer or direct purchase, should disclose all pertinent information. This offer is usually extended as a way to take control of the company. Like the proxy rules, this lets shareholders make educated decisions on such major corporate developments.
The securities laws widely ban dishonest activities of any sort in relation to the offer, purchase, or sale of securities. Behind various types of disciplinary actions are these provisions, including against cases of illegal insider trading. Get more details from https://chrisbrummer.org/.
Registration of Exchanges, Associations, and Others
The Act dictates that a range of market participants register with the Commission, from exchanges, to transfer agents to clearing agencies and more. The registration process entails filing disclosure documents which are periodically updated.
As stated previously, the exchanges and the Financial Industry Regulatory Authority (FINRA) are both SROs. SROs need to set rules allowing for the discipline of members for questionable conduct and for implementing measures that promote market integrity and protect investors. SRO proposed rules require SEC review and are published for public comment.
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