Securities Exchange Act of 1934 (Article Sample)

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Securities Exchange Act of 1934
Business transactions are conducted with the consideration of ethical approaches in order to deliver sound and valid results. Through the influence of laws, statutes, and regulations, the society is capable of reducing the chances of malicious business dealings. The American federal government implemented the Securities Exchange Act of 1934 as a resolution to malpractices that ensued or would ensue from the securities' market. It is argued that the act presents a protocol through which business transactions concerning the secondary trading of securities should be conducted. The units of trade encompassed by the act entail stocks, debentures, and bonds (Fox 1336). The study seeks to reveal the influence of the Securities Exchange Act of 1934 as an item of business law in the secondary market of securities in the USA market.
Securities Exchanges and Securities Associations
The process involves intermediaries who act as specialists in the competitive process of buying and selling the available stocks, bonds, or debentures. Therefore, they inject liquidity as well as price continuity in the market. However, the introduction of the act served to reduce the ill outcomes that would emanate from the intermediaries as it set physical places, amount of capital, and other legal conditions of trading in the stocks (Hanna and Turlington 259). The associations implemented through the Securities Exchange Act issue precise regulations to control issuers in making their companies’ changes since the outcomes are capable of affecting the securities’ prices. Furthermore, the associations provide antifraud provisions as implemented in the act's Section 17. The development led to the implementation of the Section 10(b) in the same year, which provided for the unlawful act of a person to be directly or indirectly involved in the use of interstate or mailing instruments in the securities’ transactions.
The 1934 act stipulates that every constituent company listed in the stock exchange must honor several requirements prior to their involvement. Primarily, the companies must present registrations of any core securities listed therein. Furthermore, the act compels the companies to disclose every accounting details as this would help in ensuring security for the interested shareholders. The authorized bodies also account for marginal outcomes of the companies’ products, proxy solicitations, and the auditing processes. The Congress perceived that the enforcement of full disclosure of information from the companies would enhance trust between the issuer and the investor through the markets. What is more, the Exchange Act is said to be capable of controlling the securities' exchange markets and the groups of participants. Precisely, the act enforces power over the brokers, the companies (issuers), and the industry associations. The act establishes the grounds through which interstate commerce, mailings, and other instrumentalities are set (Fox 1338). Secondly, the Congress’ decision expressed through the act enables stocks prices to show uniformity in the USA and foreign markets. The act reduces the extent at which the involved parties in each segment of securities’ exchange may manipulate the prices.
The Congress outlined the Section 4 of the Exchanges Act as vital to enforce regulations that would forecast and set directions in the threat of fluctuations in the marketplace. Therefore, the section provides for the Securities and Exchange Commission (SEC) to issue the appropriate procedures that would eventually effect the actual disclosure of information to the investors from the issuers. The SEC organization provided by the Securities Exchanges Act of 1934 receives the participating companies’ periodic files. It responds to them through the EDGAR filing system, which is an online-based correspondence method (Patterson 213). The SEC is a powerful unit since the act enables it to enforce jurisdiction to fraudulent companies, which fail to present the actual information as set in the US markets. Furthermore, the SEC is capable of issuing disciplinary acts to malpractices presented by individuals and associated companies in the marketplace. The act also enables the SEC to enforce other rules, which seem possible in correcting certain obstacles in the securities exchange markets.
The Federal Government presents a protocol through which the different classes of companies operating in the exchanges markets would present information to the SEC. For instance, Section 13(a) aids publicly registered firms to disclose their information to the SEC as the “reporting companies” under the Exchanges Act. The act ensures that the outlined companies present reports on annual, quarterly, and emergency reports. Therefore, stakeholders receive updated information in a continuous process, which reduces the chances of incurring losses, as they are capable of evaluating the processes prior to purchasing. What is more, the provision of Section 14(a), (b), and (c) enables the enforcement of democracy in the companies’ election processes as the act ensures the disclosure of information concerning the processes, and reduces the chances at which investors may be influenced by certain parties to vote for certain groups of people (Strong 474). The 13th provisions of the Securities Exchange Act assist investors in making realistic decisions concerning the sale of securities. Through it, the SEC inquires the disclosure of information from the tender offeror and restrains the practice of engaging non-existing parties in acts that may enable him to acquire over 5% of the provided stocks.
The SEC ensures that all trading parties in the American markets register and act in accordance with the section’s provisions. For example, the New York Stock Exchange is register...