What does the Securities Exchange Act of 1934 regulate?

What does the Securities Exchange Act of 1934 regulate?

• A. Primary market transactions
• B. Secondary market activity
• C. Corporate governance
• D. Broker-dealer registration

Answer: (B)

The Securities Exchange Act of 1934 primarily regulates secondary market activity, which involves the trading of previously issued securities among investors. This Act was established to ensure transparency and fairness in the securities markets, providing the necessary framework for the regulation of exchanges, brokers, and dealers, as well as the trading of securities after their initial public offering. By focusing on secondary market transactions, the Act aims to prevent fraud and manipulation and requires public companies to disclose important financial information to their investors, thereby promoting informed decision-making in the trading of securities. This regulatory oversight is crucial for maintaining investor confidence and market integrity. While corporate governance and broker-dealer registration are important aspects of securities regulation, those areas are addressed in broader terms within various sections of the securities laws. Primary market transactions, which pertain to the issuance of new securities, are also governed by a different set of regulations primarily focusing on the process of offering securities to the public. Therefore, the key focus of the Securities Exchange Act of 1934 is on ensuring orderly and fair trading in the secondary market.

The Securities Exchange Act of 1934 primarily regulates secondary market activity, which involves the trading of previously issued securities among investors. This Act was established to ensure transparency and fairness in the securities markets, providing the necessary framework for the regulation of exchanges, brokers, and dealers, as well as the trading of securities after their initial public offering.

By focusing on secondary market transactions, the Act aims to prevent fraud and manipulation and requires public companies to disclose important financial information to their investors, thereby promoting informed decision-making in the trading of securities. This regulatory oversight is crucial for maintaining investor confidence and market integrity.

While corporate governance and broker-dealer registration are important aspects of securities regulation, those areas are addressed in broader terms within various sections of the securities laws. Primary market transactions, which pertain to the issuance of new securities, are also governed by a different set of regulations primarily focusing on the process of offering securities to the public. Therefore, the key focus of the Securities Exchange Act of 1934 is on ensuring orderly and fair trading in the secondary market.