The Securities Act of 1933 is referred to as the “truth in securities” law. The act has two intended and effected results: It prohibits deceit, misrepresentations, and other fraud in the sale of securities. It does that by requiring that all investors in the capital and equity markets receive significant information concerning the securities being offered for sale to the public. It also does that by requiring the filing of a great deal of important information and facts in writing with the Security and Exchange Commission.
The act starts by requiring registration, which enables investors to make informed judgments about whether to purchase the securities issued by a corporation, or not to buy. The information required by the Securities and Exchange Commission requires that it be accurate but not guaranteed. If you suffer a loss in the purchase of securities, you have the right to recover your loss if you can prove that there was inaccurate or incomplete disclosures of important information. It starts by requiring that all securities sold in United States be registered. The registration requires a description of the company’s properties and businesses, a description of the security type being offered for sale, information about the management of the company, and certified financial statements by independent accountants.
Companies with more than $10 million in assets, whose securities are owned by more than 500 people, must file annual reports. Usually, the report includes an opening letter from the Chief Executive Officer, financial data, results of operations, market segment information, new product plans, subsidiary activities, and research and development activities on future programs. These reports are then available to the public through the Security and Exchange Commission’s database.