Securities Exchange Act of 1934

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The Securities Exchange Act of 1934 is the Act through which Congress created the Securities and Exchange Commission (SEC). President Franklin D. Roosevelt appointed Joseph P. Kennedy, former President John F. Kennedy's father, to serve as the first chairman of the SEC.

The Act, put into play on June 6, 1934, gave the SEC broad authority over all aspects of the securities industry, including the power to register, regulate, and oversee brokerage firms, transfer agents, and clearing agencies, as well as the nation's securities self regulatory organizations (SROs).[1]

The Act also identifies and prohibits certain types of conduct in the markets and provides the SEC with disciplinary powers over regulated entities and persons associated with them, in addition to empowering the SEC to require periodic reporting of information by companies with publicly traded securities.

Coming on the heels of the Stock Market Crash of 1929, the act was meant to restore investor confidence in securities trading. It was widely believed that the market crash, which heralded the worldwide economic downturn of the Great Depression, was due in part to deceit, duplicity, and ineptitude on the part of many bankers and stock brokers; structural weaknesses of the institutions they represented; and a lack of government oversight and regulation.)[2]

References

  1. A Brief History of Securities Regulation. State of Wisconsin Department of Financial Institutions.
  2. Securities Exchange Act of 1934. Encyclopedia Of Business.