6.1  The Securities Act of 1933

One of the first pieces of legislation to come out of the 1929 stock market crash 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 or own. To that end, the Securities Act of 1933 requires the vast majority of securities offered to U.S. investors to go through a registration and disclosure process.

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 (price, date, etc.), and information about the issuer itself. Usually, this form is filed by the company issuing the securities with the help of an investment banker (also known as an underwriter), which is a special type of broker-dealer that focuses on helping companies issue their securities to the public.

Once the registration is filed, a 20-day cooling-off period ensues. During this period, regulators examine