In the chaotic securities markets of the 1920s, companies often sold stocks and bonds on the basis of glittering promises of fantastic profits without disclosing any meaningful information to investors. These conditions contributed to the disastrous Stock Market Crash of 1929. In response, the U.S. Congress enacted the federal securities laws and created the Securities and Exchange Commission (SEC) to administer them.

There are two primary sets of federal laws that come into play when a company wants to offer and sell its securities to the public. They are:

• the Securities Act of 1933 (Securities Act), and
• the Securities Exchange Act of 1934 (Exchange Act).

Securities Act
The Securities Act generally requires companies to give investors "full disclosure" of all "material facts;" the facts investors would find important in making an investment decision. This Act also requires companies to file a registration statement with the SEC that includes information for investors. The SEC does not evaluate the merits of offerings or determine if the securities offered are good investments. The SEC staff reviews registration statements and declares them effective if companies satisfy our disclosure rules. We describe this process in more detail below.

Exchange Act
The Exchange Act requires publicly held companies to disclose information continually about their business operations, financial conditions, and managements. These companies, and in many cases their officers, directors, and significant shareholders, must file periodic reports or other disclosure documents with the SEC. In some cases, the company must deliver the information directly to investors. We discuss these obligations in more detail below.

Exemptions:  your company may be exempt from these registration and reporting requirements.

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