XVI. Securities Regulation - 1933 Act

A security is a contract, transaction or scheme whereby a person invests his money in a common enterprise and is led to expect profits solely from the efforts of a promoter or a third party (Howey test)

Provide investors with information for securities offered for sale and to prohibit fraud in the sale of securities.

The 1933 Act governs the public distribution of securities. It prohibits the offer or sale of securities to the public unless the offering is properly registered.

A. Persons covered are underwriters, dealers and issuers.

1. Underwriter purchases securities from an issuer with the intent to distribute to dealers and/or the general public. E.g. UBS

2. Dealer sells or trades securities. E.g. Charles Schwab 3. Issuer is an entity whose securities are being sold. E.g. IBM

B. Section 5 of the 1933 Securities Act

It governs sales through interstate commerce. A registration statement must be filed with the SEC and a prospectus prepared. Periods are:

1. Pre-filing: It is unlawful for issuers, underwriters or dealers to sell securities.

2. Filing: The registration statement is effective 20 days after filing with SEC. Securities cannot be sold during the waiting period but offers such as “tombstone” ads are allowed. They include the name of the company, kind of security, price, who executes purchase orders, and location to obtain a prospectus.

3. Post-effective period: sales can be commenced.

C. Contents of Registration statement S-l: signed by issuer, ceo, cfo, chief accounting Officer, and a majority of the board of directors.

It must have the following material information:

1.