Over the years, many investors and attorneys have asked me about the important laws that have shaped our industry and one of the most important laws of them all is "The Act of 1934".
With the Act of 1934, Congress created the Securities and Exchange Commission. The Act empowers the SEC with broad authority over all aspects of the securities industry. This includes the power to register, regulate, and oversee brokerage firms, transfer agents, and clearing agencies as well as the nation's securities self regulatory organizations (SRO's).
The various securities exchanges, such as the New York Stock Exchange, the NASDAQ Stock Market, and the Chicago Board of Options are SRO's. The Financial Industry Regulatory Authority (FINRA), formerly known as the National Association of Securities Dealers (NASD), is also an self-regulatory organization (SRO).
The Act also identifies and prohibits certain types of conduct in the markets and provides the Commission with disciplinary powers over regulated entities and persons associated with them.The Act also empowers the SEC to require periodic reporting of information by companies with publicly traded securities.