Key Securities Fraud Provisions of the Securities Act of 1933

by Scott L. Silver

Last Updated May 13, 2025 In Laws, Securities Fraud

The Securities Act of 1933 was designed to ensure that investors have financial and other important information about securities that are publicly sold and traded. It also bans the use of fraud, deceit, and misrepresentation in the sale of securities. The act was passed following the 1929 stock market crash to address the widespread manipulation and lack of disclosure that contributed to the economic crisis.

If you believe you have been harmed by unlawful financial activity, Silver Law Group’s team of securities fraud attorneys can help you seek financial recovery. We can aggressively advocate for your legal interests and vigorously pursue financial compensation – all on a contingency fee basis.

What Is The Securities Act Of 1933?

The Securities Act of 1933 is a New Deal-era federal law that aimed to protect investors from fraud by mandating transparency in the sale of stocks and bonds. It requires companies that sell securities to the public to disclose detailed financial information about their offerings. This was the first major law regulating the securities industry and is often referred to as the “Truth in Securities Act.”

Its purpose was to ensure investors receive accurate and material information about securities before purchasing them, preventing fraudulent practices in the market. The act requires companies to register their securities with the Securities and Exchange Commission (SEC) before selling them to the public.

Key Provisions Of The Securities Act Of 1933

Under the Securities Act of 1933, companies must register most securities they intend to sell publicly with the SEC. They must submit a registration statement containing detailed information about the company, its financials, and the offering, and investors must receive a prospectus summarizing key information from the registration statement before buying securities.

Certain types of securities, such as government bonds and small private offerings, may be exempt from registration requirements. Notably, the SEC is responsible for overseeing the implementation and enforcement of the Securities Act. However, while there are exemptions to the registration requirements, all issuers of securities are required to be truthful and honest in their SEC filings.

The Securities Act of 1933 includes several provisions that prohibit securities fraud. Section 17(a) makes it illegal to defraud investors by using schemes, devices, or material misstatements. It also prohibits obtaining money or property through fraud, or any business practices that defraud or deceive investors.

Rule 144A provides a safe harbor for certain private resales of restricted securities to qualified institutional buyers (QIB). It has become a key method for non-U.S. companies to access U.S. capital markets.

Contact An Attorney If You Sustained Losses Due To A Violation Of The Securities Act Of 1933

While the rules of the Securities Act of 1933 are designed as safeguards from fraud, individuals and entities still engage in unlawful activity that deceives and financially harms investors. Silver Law Group is a nationally recognized firm focusing on securities class action litigation against large financial institutions, banks, auditors, and other parties who commonly play a role in investment fraud.

If you suspect that something is not right with your investments or believe that you have been harmed by fraud, contact Silver Law Group today. We can provide a free, one-on-one consultation to discuss your potential case with one of our skilled attorneys who works on a contingency fee basis.