Securities Law

Securities law in the United States refers to the field of U.S. law that covers various aspects of transactions and other dealings with securities. It includes both Federal and state level regulation by purely governmental regulatory agencies, most notably the Federal level United States Securities and Exchange Commission (SEC). There are also quasi-governmental organizations ‘self regulatory organizations’ (SRO’s), such as the Financial Industry Regulatory Authority (FINRA) (formed by the merger of the enforcement divisions of the National Association of Securities Dealers, Inc. (NASD) and the New York Stock Exchange, Inc. (NYSE). Significant influence is exerted by the availability of private rights of action under both state and Federal securities laws, as well as more generalized laws covering fraud. Futures and some aspects of derivatives are regulated by the Federal Commodity Futures Trading Commission (CFTC).

There are eight principal U.S. federal statutes in the area of securities regulation:

• The Securities Act of 1933
• The Securities Exchange Act of 1934
• The Public Utility Holding Company Act of 1935
• The Trust Indenture Act of 1939
• The Investment Company Act of 1940
• The Investment Advisers Act of 1940
• The Securities Investor Protection Act of 1970
• The Sarbanes-Oxley Act of 2002

There are also fairly extensive regulations under these laws, largely made by the SEC. One of these regulations, know by its citation 10b-5, is particularly notable because it creates and regulates federal civil liability in between private parties in transactions involving securities which are otherwise exempt from federal securities regulation.

State laws governing issuance and trading of securities are commonly referred to as blue sky laws.