THE SECURITIES EXCHANGE ACT OF 1934
Securities Exchange Act of 1934 (’34 Act) regulates transfers of securities after the initial sale. Basically, it picks up where the ’33 Act leaves off. More specifically, it deals with regulation of securities exchanges, brokers, and dealers in securities. It also created the Securities and Exchange Commission. The ’34 Act makes it illegal to sell a security on a national exchange unless a registration is effective for the security. Registration under the ’34 Act requires filing prescribed forms in a timely manner with the applicable stock exchange and the SEC. The registered issuer must then file periodic reports as well as report significant developments that would affect the value of the security. The ’34 Act contains several provisions allowing for civil liability of individuals trading securities. The most notable of these provisions are discussed below.
• Note: Most securities law violations under the ’34 Act may be enforced civilly (bring a lawsuit) either by private plaintiffs or the SEC. The Private Securities Litigation Reform Act of 1995 (PLSRA) states that only the SEC can pursue claims against third parties not directly responsible for the securities law violation. The Department of Justice is primarily charged with bringing criminal actions for violation of securities laws.