Several General Laws of Stock Market Operation
There are several general laws that govern the operation of the stock market in the United States and other countries. These laws are designed to protect investors, ensure fair and efficient markets, and prevent fraud and manipulation. Some of the most important laws are:
The Securities Act of 1933, which requires that companies disclose truthful and relevant information to the public when they issue securities, such as stocks and bonds. This law aims to prevent deceit and misrepresentation in the sale of securities.
The Securities Exchange Act of 1934, which regulates the trading of securities, the activities of brokers and dealers, and the oversight of self-regulatory organizations, such as stock exchanges and the Financial Industry Regulatory Authority (FINRA). This law also created the Securities and Exchange Commission (SEC), the federal agency that enforces the securities laws.
The Investment Company Act of 1940 and the Investment Advisers Act of 1940, which regulate the registration and operation of mutual funds, exchange-traded funds, and other investment companies, as well as the conduct and responsibilities of investment advisers.
The Sarbanes-Oxley Act of 2002, which was enacted in response to the corporate scandals of Enron, WorldCom, and others. This law introduced new standards for corporate governance, accounting, auditing, and disclosure, and increased the penalties for securities fraud and obstruction of justice.
The Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, which was enacted in response to the global financial crisis of 2008-2009. This law aimed to strengthen the regulation and supervision of the financial system, enhance consumer protection, and promote financial stability and accountability.
The Jumpstart Our Business Startups Act of 2012, which was enacted to encourage entrepreneurship and innovation. This law eased some of the regulatory requirements and costs for small businesses and startups to raise capital and go public.
These are some of the major laws that affect the stock market, but there are also many rules and regulations issued by the SEC, FINRA, and other authorities that implement and enforce these laws. You can learn more about these laws and rules by visiting the websites of the SEC.
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