Securities Act of 1933
The 'truth in securities' law governing the PRIMARY market: new issues must be registered with the SEC and sold with a prospectus containing full and fair disclosure, with liability for misstatements.
Beyond the IPO “tell,” the exam loves the registration timeline: the cooling-off period of at least 20 days that follows filing, during which only a preliminary (red herring) prospectus may circulate — no sales, no money, no general advertising, only nonbinding indications of interest. Watch what is permitted before the effective date: a tombstone ad is allowed (it is not an offer), but the final prospectus and confirmations belong to the effective date and after. Another favorite hinge is liability — civil exposure (Section 11) and criminal exposure for willful violations (Section 24) attach to a false or misleading registration statement/prospectus, reaching issuers, signing officers/directors, and underwriters.
The classic trap is mixing up the two statutes: ongoing issuer reporting (10-K, 10-Q, proxy rules, insider reporting) is 1934 Act, not 1933. Students also forget that SEC effectiveness is not approval — clearing registration never means the SEC endorses the security. And note the scope split: the 1933 Act registers the securities themselves, whereas Form U4/U5 and statutory disqualification govern the people selling them.
PlayPrepHQ study notes are written and reviewed against primary exam sources. How we create & review content →