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Securities Act of 1933

THE SECURITIES ACT OF 1933

The ’33 Act is a federal disclosure law covering the initial sale of securities to the public. Specifically, the ’33 Act makes it illegal to use the mail or any other means of interstate communication or transportation to sell securities without disclosing certain financial information to potential investors. Most notably, the issuer must register the issuance of securities with the SEC, unless the issuer is able to conduct the issuance pursuant to a registration exemption. Regardless, the ’33 Act covers all initial offers to sell securities and places detailed disclosure requirements on those issuing securities (issuees). These disclosures allow potential investors to make informed decisions about purchasing the issued securities.

•    Note: Failure to comply with the ’33 Act may lead to civil and criminal penalties. Often, however, violations of the ’33 Act may lead to court ordered relief such as injunctions against the violator or equitable remedies for those negatively affected by the issuance.

 

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