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26-517: Section 2 prohibits stock buybacks on the open market. Section 3 requires one-third board representation for employees of listed companies. Specifically, this amends §12b of the Securities Exchange Act of 1934 (15 USC 78l(b)(1)) to add "No issuer may register securities on a national exchange unless at least 1⁄3 of the issuer’s directors are chosen by the issuing company’s employees in a one-employee-one-vote election process." It then requires

52-476: A certain amount of assets (500 shareholders, above $ 10 million in assets, per Act sections 12, 13, and 15), the 1934 Act requires that issuers regularly file company information with the SEC on certain forms (the annual 10-K filing and the quarterly 10-Q filing). The filed reports are available to the public via EDGAR . If something material happens with the company (change of CEO, change of auditing firm, destruction of

78-485: A company's failure to communicate relevant information to investors. Many plaintiffs in the securities litigation field plead violations of section 10(b) and Rule 10b-5 as a "catch-all" allegation, in addition to violations of the more specific antifraud provisions in the 1934 Act. Section 13(b)(3)(A) of the Securities Exchange Act of 1934 provides that "with respect to matters concerning the national security of

104-564: A notice in the Federal Register , President Bush delegated authority under this section to John Negroponte , the Director of National Intelligence . Administration officials told Business Week that they believe this is the first time a President has ever delegated the authority to someone outside the Oval Office. Self-regulatory organization A self-regulatory organization ( SRO )

130-411: A significant number of company assets), the SEC requires that the company issue within 4 business days an 8-K filing that reflects these changed conditions (see Regulation FD ). With these regularly required filings, buyers are better able to assess the worth of the company, and buy and sell the stock according to that information. While the 1933 Act contains an antifraud provision ( Section 17 ), when

156-662: Is a defined term. The principal federal regulatory authority—the Securities and Exchange Commission (SEC)—was established by the federal Securities Exchange Act of 1934 . The SEC originally delegated authority to the National Association of Securities Dealers (NASD, now Financial Industry Regulatory Authority (FINRA) ) and to the national stock exchanges (e.g., the NYSE ) to enforce certain industry standards and requirements related to securities trading and brokerage. On July 26, 2007,

182-652: Is a law governing the secondary trading of securities ( stocks , bonds , and debentures ) in the United States of America. A landmark piece of wide-ranging legislation, the Act of '34 and related statutes form the basis of regulation of the financial markets and their participants in the United States. The 1934 Act also established the Securities and Exchange Commission (SEC), the agency primarily responsible for enforcement of United States federal securities law. Companies raise billions of dollars by issuing securities in what

208-496: Is also an SRO with official, statutory status. Because of the prominence of the SROs in the securities industry, the term SRO is often used to narrowly to describe an organization authorized by statute or government agency to exercise control over a certain aspect of the industry. The National Association of Realtors (NAR) is an example of an SRO that fills the vacuum left by the absence of government oversight or regulation. The NAR sets

234-419: Is an organization that exercises some degree of regulatory authority over an industry or profession. The regulatory authority could exist in place of government regulation, or applied in addition to government regulation. The ability of an SRO to exercise regulatory authority does not necessarily derive from a grant of authority from the government. In United States securities law, a self-regulatory organization

260-551: Is called NASDAQ , standing for the National Association of Securities Dealers Automated Quotation System. In 1938, the Exchange Act was amended by the Maloney Act , which authorized the formation and registration of national securities associations. These groups would supervise the conduct of their members subject to the oversight of the SEC. The Maloney Act led to the creation of the National Association of Securities Dealers, Inc. –

286-540: Is distinguished from exchanges and associations in that the volumes for ATS trades are comparatively low, and the trades tend to be controlled by a small number of brokers or dealers. ATS acts as a niche market, a private pool of liquidity. Reg ATS , an SEC regulation issued in the late 1990s, requires these small markets to 1) register as a broker with the NASD, 2) register as an exchange, or 3) operate as an unregulated ATS, staying under low trading caps. A specialized form of ATS,

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312-462: Is known as the primary market . Contrasted with the Securities Act of 1933 , which regulates these original issues, the Securities Exchange Act of 1934 regulates the secondary trading of those securities between persons often unrelated to the issuer, frequently through brokers or dealers. Trillions of dollars are made and lost each year through trading in the secondary market. One area subject to

338-489: The Advertising Self-Regulatory Council , which is the U.S. advertising industry's self-regulatory body. In addition to setting guidelines, these programs provide third-party accountability and dispute resolution services to companies, outside and in-house counsel, consumers, and others in arenas such as privacy, advertising, data collection, child-directed marketing, and more. The law "On self-regulation"

364-520: The NASDAQ and the NYSE American . The 1934 Act also regulates broker-dealers without a status for trading securities. A telecommunications infrastructure has developed to provide for trading without a physical location. Previously these brokers would find stock prices through newspaper printings and conduct trades verbally by telephone. Today, a digital information network connects these brokers. This system

390-570: The Securities and Exchange Commission , consulting with the National Labor Relations Board to make regulations ensuring democratic election processes, and 1/3 of an issuer's board to "be composed of employee representatives within 2 years of the date of enactment of this Act." The Act was welcomed by the Roosevelt Institute , and media outlets. A Civis poll found people in "the “lean Democrat” category voted 75% in favor of

416-419: The 1934 Act was enacted, questions remained about the reach of that antifraud provision and whether a private right of action—that is, the right of an individual private citizen to sue an issuer of stock or related market actor, as opposed to government suits—existed for purchasers. As it developed, section 10(b) of the 1934 Act and corresponding SEC Rule 10b-5 have sweeping antifraud language. Section 10(b) of

442-492: The 1934 Act's regulation is the physical place where securities (stocks, bonds, notes of debenture) are exchanged. Here, agents of the exchange, or specialists , act as middlemen for the competing interests in the buying and selling of securities. An important function of the specialist is to inject liquidity and price continuity into the market. Some of the more well known exchanges include the New York Stock Exchange ,

468-699: The Act (as amended) provides (in pertinent part): It shall be unlawful for any person, directly or indirectly, by the use of any means or instrumentality of interstate commerce or of the mails, or of any facility of any national securities exchange ... Section 10(b) is codified at 15 U.S.C.   § 78j(b) . The breadth and utility of section 10(b) and Rule 10b-5 in the pursuit of securities litigation are significant. Rule 10b-5 has been employed to cover insider trading cases, but has also been used against companies for price fixing (artificially inflating or depressing stock prices through stock manipulation ), bogus company sales to increase stock price, and even

494-500: The Electronic Communications Network (or ECN), has been described as the "black box" of securities trading. The ECN is a completely automated network, anonymously matching buy and sell orders. Many traders use one or more trading mechanisms (the exchanges, NASDAQ, and an ECN or ATS) to effect large buy or sell orders – conscious of the fact that overreliance on one market for a large trade is likely to unfavorably alter

520-449: The NASD, which is a Self-Regulatory Organization (or SRO). The NASD had primary responsibility for oversight of brokers and brokerage firms, and later, the NASDAQ stock market. In 1996, the SEC criticized the NASD for putting its interests as the operator of NASDAQ ahead of its responsibilities as the regulator, and the organization was split in two, one entity regulating the brokers and firms,

546-687: The SEC approved a merger of the enforcement arms of the NYSE and the NASD, to form a new SRO, the Financial Industry Regulatory Authority (FINRA). In addition, Congress created the Municipal Securities Rulemaking Board (MSRB) as an SRO charged with adopting investor protection rules governing broker-dealers and banks that underwrite, trade and sell tax-exempt bonds, 529 college savings plans and other types of municipal securities. The American Arbitration Association

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572-511: The United States", the President or the head of an Executive Branch agency may exempt companies from certain critical legal obligations. These obligations include keeping accurate "books, records, and accounts" and maintaining "a system of internal accounting controls sufficient" to ensure the propriety of financial transactions and the preparation of financial statements in compliance with "generally accepted accounting principles". On May 5, 2006, in

598-613: The other regulating the NASDAQ market. In 2007, the NASD merged with the NYSE (which had already taken over the AMEX), and the Financial Industry Regulatory Authority (FINRA) was created. In the last 30 years, brokers have created two additional systems for trading securities. The alternative trading system, or ATS, is a quasi exchange where stocks are commonly purchased and sold through a smaller, private network of brokers, dealers, and other market participants. The ATS

624-587: The question, and just 9% opposed. Around 43% of the “lean Republican” category supported the concept, while 31% opposed, and the pure Republican category saw 4% more opposed than in favor. But overall, a clear majority of people favor the concept." Securities Exchange Act of 1934 The Securities Exchange Act of 1934 (also called the Exchange Act , ' 34 Act , or 1934 Act ) ( Pub. L.   73–291 , 48  Stat.   881 , enacted June 6, 1934 , codified at 15 U.S.C.   § 78a et seq.)

650-610: The rules for multiple listing services and how brokers use them. Another example is the American Medical Association which sets rules for ethics, conflicts, disciplinary action, and accreditation in medicine. BBB National Programs is an example of an organization that houses multiple SROs, such as the Children's Advertising Review Unit , (CARU) and the National Advertising Division (NAD), formerly known as

676-428: The trading price of the target security. While the 1933 Act recognizes that timely information about the issuer is vital to effective pricing of securities, the 1933 Act's disclosure requirement (the registration statement and prospectus) is a one-time affair. The 1934 Act extends this requirement to securities traded in the secondary market. Provided that the company has more than a certain number of shareholders and has

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