The Securities Act of 1933 is limited, as we have just seen, to new securities issues—that is the primary market. The trading that takes place in thesecondary market is far more significant, however. In a normal year, trading in outstanding stock totals some twenty times the value of new stock issues.
To regulate the secondary market, Congress enacted theSecurities Exchange Act of 1934. This law, which created the SEC, extended the disclosure rationale to securities listed and registered for public trading on the national securities exchanges. Amendments to the act have brought within its ambit every corporation whose equity securities are traded over the counter if the company has at least $10 million in assets and five hundred or more shareholders.
- 1072 reads
