Securities Law

Negotiable Instruments (securities law) are any form of ownership that can be easily traded on a secondary market, such as stocks and bonds. It also includes their derivatives, such as futures contracts, options, or mutual funds. Traders must be licensed to buy and sell securities to assure they are trained to follow the laws and regulations set forth by the Securities and Exchange Commission (SEC). Blue Sky Laws are used by the States to enforce securities law and protect investors.

The Securities and Exchange Commission is the federal agency predominantly responsible for administering and enforcing federal Securities laws. The SEC attempts to protect investors by ensuring that the securities markets are honest and fair. When needed, the SEC enforces securities laws through a variety of means, including fines, referral for criminal prosecution, revocation or suspension of licenses, and injunctions.

Headquartered in Washington, D.C., the Commission consists of five (5) members appointed by the president, with one position expiring each year. No more than three (3) members may be from any single political party. With more than 900 employees, the agency has five (5) regional and six (6) district offices throughout the country and enjoys a generally satisfactory reputation.

The Commission enforces the numerous laws and regulations under its jurisdiction in a number of ways. The SEC may seek a court injunction against acts and practices that mislead investors or otherwise violate securities laws; suspend or revoke the registration of brokers, dealers, investment companies, and advisers who have dishonored securities laws; refer persons to the Justice Department for criminal prosecution in situations involving criminal fraud or other willful violation of securities laws; and bar attorneys, accountants, and other professionals from practicing before the Commission. The SEC may also conduct investigations to determine whether a violation of federal securities laws has transpired. The SEC has the power to subpoena witnesses, administer oaths, and compel the production of records anywhere in the United States.

When an SEC investigation uncovers evidence of wrongdoing, the Commission may order an administrative hearing to determine responsibility for the violation and impose sanctions. An administrative hearing is held before an administrative law judge, who is an independent SEC employee. The hearing is comparable to that of a non-jury trial and may be either public or private. After the hearing, the judge makes an initial written decision containing findings of fact and conclusions of law.

Willful violations may be punished by fines and imprisonment. The SEC refers such cases to the Department of Justice for criminal prosecution. "Willfulness" means only that the defendant intended the act, not that he knew that it was a violation of securities laws.

For more information on Negotiable Instruments and Securities law, review the resources below. Additionally, you can find an attorney in your area who can assist you with your legal questions and issues by visiting the Law Firms page of our website.


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Articles About Securities Law

  • SEC v. Dawn J. Bennett: From “Financial Myth Busting” To “Busted”
    Last fall, the SEC initiated disciplinary proceedings against financial advisor and self-proclaimed “Financial Myth Buster” Dawn Bennett, accusing her of publicly inflating her client assets under management (or “AUM”) and exaggerating her investment returns.
  • SEC Halts Ash Narayan from Defrauding RGT Clients
    The Securities and Exchange Commission (“SEC”) announced that it obtained a court ordered “freeze” of the assets of three individuals, including Ash Narayan, formerly of RGT Wealth Advisors, who, the SEC alleges, siphoned millions of dollars from the accounts he managed at RGT for professional athletes and others while he was the manager of RGT Wealth Advisor’s Orange County, California office.
  • FINRA Submits Proposed Rule Changes to Clarify Offsetting Awards
    FINRA has recently filed proposed rule changes that provide much-needed clarification to how arbitration awards resulting in both sides paying money should be handled.
  • SEC Whistleblower Program
    In 2010, Congress implemented a new act that provides for monetary incentives for whistleblowers who report Securities and Exchange Commission violations. Whistleblowers are individuals with important information about the illegal acts of others.
  • Non-Traded REITs: Great for Brokers, Not for Clients
    FINRA, the Financial Industry Regulatory Authority, filed a complaint against VFG Securities, Inc., a small broker-dealer that allegedly generated almost 95% of its annual revenue from selling non-publicly traded REITs and other illiquid investments to its clients.
  • Transitioning Broker Alert - FINRA Adopts New Comp Disclosure Rule
    The Securities and Exchange Commission approved last week a new rule proposed by FINRA, the Financial Industry Regulatory Authority, which requires brokers departing one broker dealer for another, to send “educational information” to clients about their move to another firm and the financial compensation and incentives they will receive from the new firm for making the move.
  • SEC Fiduciary Rule Proposal to Potentially Differ from DOL’s
    Calling all financial advisors – time to grab your compasses and brush up on your map-reading skills. As if the path to confirmation of the Department of Labor (DOL) fiduciary rule were not controversy-ridden enough, according to Investment News, SEC Chairwoman Mary Jo White announced this week the SEC may propose its own rule that “may not mesh perfectly” with the DOL’s.
  • FINRA Investigations Under Rule 8210
    It is every registered person’s nightmare. You receive a letter from a FINRA office notifying you that you are the subject of a FINRA investigation.
  • Update: “Regulation A+” Approved by SEC
    The Securities and Exchange Commission (the “SEC”) has recently approved an amendment to Regulation A (“Reg A”). Previously, Reg A was a small scale public offering of “unregistered securities” capped at $1.5 million in twelve months. Today, Reg A has been modernized into “Reg A+”. The SEC created two tiers within Reg A+: Tier One and Tier Two.
  • Lawsuits Filed By Providers and Investors Over Life Settlement Investments
    Life settlement providers, brokers, and investors have filed lawsuits regarding these life insurance investments. For more information about filing a life settlement investment lawsuit, contact the lawyers at Heygood, Orr & Pearson by calling toll-free at 1-877-446-9001.
  • All Banking and Finance Law Articles

    Articles written by attorneys and experts worldwide discussing legal aspects related to Banking and Finance including: asset protection, capital markets, corporate finance, financial planning, financial services law, investment law, offshore accounts, private equity, project finance, public finance, securities, trade investment and venture capital.

Securities Law - US

  • ABA - Securities Litigation Committee

    The Securities Litigation Committee, whose diverse membership includes attorneys from both the plaintiff and defense perspective, corporate counsel, and academicians, strives to be an invaluable resource to those practicing or interested in securities litigation, arbitration or regulatory enforcement matters.

  • EDGAR - SEC Filings

    All companies, foreign and domestic, are required to file registration statements, periodic reports, and other forms electronically through EDGAR. Anyone can access and download this information for free. Here you'll find links to a complete list of filings available through EDGAR and instructions for searching the EDGAR database.

  • National Securities Markets Improvement Act - NSMIA

    Passed by the U.S. Congress in 1996, the NSMIA was an attempt to update and amend previous security acts and create one uniform code that companies and regulators could follow.

  • Securities - Definition

    A security is a fungible, negotiable instrument representing financial value. Securities are broadly categorized into debt securities (such as banknotes, bonds and debentures) and equity securities, e.g., common stocks; and derivative contracts, such as forwards, futures, options and swaps. The company or other entity issuing the security is called the issuer. A country's regulatory structure determines what qualifies as a security. For example, private investment pools may have some features of securities, but they may not be registered or regulated as such if they meet various restrictions.

  • Securities Act of 1933

    The Securities Act of 1933 was the first major piece of federal legislation regarding the sale of securities. Prior to this legislation, the sale of securities was primarily governed by state laws; however, the market crash of 1929 raised some serious questions about the effectiveness of how the markets were being governed. Because of the turmoil surrounding the investing community at this time, the federal government had to bring back stability and investor confidence in the overall system.

  • Securities and Exchange Commission (SEC)

    The mission of the U.S. Securities and Exchange Commission is to protect investors, maintain fair, orderly, and efficient markets, and facilitate capital formation. As more and more first-time investors turn to the markets to help secure their futures, pay for homes, and send children to college, our investor protection mission is more compelling than ever. As our nation's securities exchanges mature into global for-profit competitors, there is even greater need for sound market regulation.

  • Securities Exchange Act of 1934

    The act which created the SEC, outlawed manipulative and abusive practices in the issuance of securities, required registration of stock exchanges, brokers, dealers, and listed securities, and required disclosure of certain financial information and insider trading.

  • Securities Investor Protection Act

    Although the Bankruptcy Code provides for a stockbroker liquidation proceeding (11 U.S.C. § 741 et seq.), it is far more likely that a failing brokerage will find itself involved in a proceeding under the Securities Investor Protection Act of 1970 ("SIPA") (15 U.S.C. §§ 78aaa et seq.), rather than a Bankruptcy Code liquidation case.

  • State Blue Sky Laws

    State regulations designed to protect investors against securities fraud by requiring sellers of new issues to register their offerings and provide financial details. This allows investors to base their judgments on trustworthy data.

Organizations For Securities Law

  • ABA Securities Association (ABASA)

    The ABA Securities Association (ABASA) is a separately chartered trade association and non- profit affiliate of the American Bankers Association whose mission is to represent the interests of banks underwriting and dealing in securities, proprietary mutual funds and derivatives before Congress, federal and state governments, and the courts. ABASA supports bank securities operations through research, education, compliance assistance and 'peer group' opportunities.

  • Blog

    Practical Corporate and Securities Law Blog

  • Financial Industry Regulatory Authority (FINRA)

    The Financial Industry Regulatory Authority (FINRA), is the largest independent regulator for all securities firms doing business in the United States. All told, FINRA oversees nearly 4,750 brokerage firms, about 167,000 branch offices and approximately 633,500 registered securities representatives.

  • Forbes

    Online source for the latest business and financial news and analysis. Covering personal finance, lifestyle, technology and stock markets.

  • is the official website of The Nasdaq Stock Market, the largest US electronic stock market. With approximately 3,200 companies, it lists more companies and, on average, trades more shares per day than any other U.S. market. It is home to companies that are leaders across all areas of business, including technology, retail, communications, financial services, transportation, media and biotechnology. NASDAQ is the primary market for trading NASDAQ-listed stocks.

  • SEC, NASD and Securities Law Information Center

    This site is designed to assist investors who have lost money. The SEC, NASD and Securities Law Information Center helps investors document their cases in order to best explain how their funds may have been improperly managed. Clients can then follow up on their own or with a law firm in an attempt to recover their losses.

  • Securities Class Action Clearinghouse

    The Securities Class Action Clearinghouse provides detailed information relating to the prosecution, defense, and settlement of federal class action securities fraud litigation. The Clearinghouse maintains an Index of Filings of 3070 issuers that have been named in federal class action securities fraud lawsuits since passage of the Private Securities Litigation Reform Act of 1995. The Clearinghouse also contains copies of more than 32,200 complaints, briefs, filings, and other litigation-related materials filed in these cases.

  • Securities Investor Protection Corporation (SIPC)

    SIPC is an important part of the overall system of investor protection in the United States. While a number of federal, self-regulatory and state securities agencies deal with cases of investment fraud, SIPC's focus is both different and narrow: Restoring funds to investors with assets in the hands of bankrupt and otherwise financially troubled brokerage firms. The Securities Investor Protection Corporation was not chartered by Congress to combat fraud.

  • Securities Law Prof Blog

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