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
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- Regulation A Offerings – Blue Sky RequirementsOne aspect of Regulation A that should be considered is the impact of state blue sky laws on the offering as well as resales. This is particularly important since Tier 1 and Tier 2 of Regulation A are treated differently under state blue sky laws.
- Regulation A Secondary Sales: What Are They?Regulation A provides companies with liquidity for their stockholders by allowing issuers to include shares held by selling security in the offering. This enables investors access to liquidity through secondary sales as a part of a qualified Regulation A+ offering. In an issuer’s first Regulation A+ offering and for the 12 month period after its first offering, sales by security holders are limited to no more than 30 percent of the aggregate offering price of the security.
- Resales and Secondary Trading: Regulation AState blue sky laws should be considered when selecting the appropriate Regulation A + Offering tier. Issuer sales as well as selling stockholder resales under Tier 1 and Tier 2 are treated differently under state blue sky laws. State blue sky laws vary from state to state. A company using Regulation A to raise capital should consider liquidity for investors in light of the applicability of state blue sky laws to secondary trading.
- Regulation A+ - Does It Allow Testing the Waters with Investors?Issuers using Regulation A+ can test the waters with investors and use solicitation materials both before and after the offering statement is filed with the SEC, subject to issuer compliance with the rules on filing and disclaimers. Using Regulation A+, you can advertise everywhere you want, including all over social media in places where you think you’ll find potential investors.
- Regulation A Investor Bulletin Issued by SECA Regulation A Investor Bulletin was just issued by the SEC. Regulation A has had success since its amendment in 2015.
- Rule 15c2-11 Applications in Going Public TransactionsFiling a registration statement is one of the first steps in a going public transaction. Once a registration is declared effective, the issuer may sell the securities registered. A registration statement will not result in a stock trading symbol. Only FINRA can issue a trading symbol pursuant to Rule 15c-211.
- What Is Form 10-Q ?Publicly traded companies are required to file reports under the Securities Exchange Act of 1934. These include quarterly reports on Form 10-Q and an annual report on Form 10-K. Form 10-Q is due within 45 days after the end of each quarter.
- Benefits of Direct Public OfferingsWhile going public offers many benefits it also comes with risks and quantities of regulations with which issuers must become familiar. Despite the risks, the U.S. capital markets remain one of the most attractive sources of financing in the world.
- Cryptocurrency Expert Witness in LitigationDigital and online forms of money handled through transactions constitute cryptocurrency, and these networked interactions lead to possible legal complications based on real world issues with the technical and financial realms. To understand these matters better, a courtroom may need the help of an expert witness to detail what cryptocurrency is and how it affects the plaintiff.
- 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.
