8.1. The Securities Act of 1933

One of the first pieces of legislation to come out of the most devastating U.S. stock market crash of all time was the Securities Act of 1933. At the core of this act is the belief that investors have a right to make informed decisions about the securities they’re purchasing. To that end, the Securities Act of 1933 requires most issuing companies to register their securities with the SEC before offering them to U.S. investors.

The initial step in this process is the filing of a registration statement, which contains key information about the security being issued, the details of its actual issue process, such as price and date, and information about the issuer. Usually, this form is filed by the company issuing the securities with the help of an investment bank (also known as an underwriter), which is a special type of broker-dealer that focuses on helping companies issue their securities to the public.

When the registration is filed, the security begins a 20-day cooling-off period. During this period, regulators examine the registration filing and the issuer to make sure the legal requirements are met. This usual