what is the securities exchange act of 1934 
the securities exchange act of 1934 sea was created to govern securities transactions on the secondary market after issue its goal was to ensure greater financial transparency and accuracy and less fraud or manipulation the sea authorized the formation of the securities and exchange commission sec the regulatory arm of the sea the sec has the power to oversee securities stocks bonds and over the counter securities as well as markets and the conduct of financial professionals including brokers dealers and investment advisors it also monitors the financial reports that publicly traded companies are required to disclose understanding the securities exchange act of 1934the sea regulates trading on the secondary market and major stock exchanges as well as participants in these markets participants can include exchanges brokers transfer agents and clearing agencies the secondary market is where trading happens after assets are initially issued by a company these assets can include stocks bonds stock options and stock futures all companies listed on stock exchanges must follow the reporting requirements outlined in the securities exchange act of 1934 primary requirements include the purpose of these requirements is to ensure transparency fairness and an environment of investor confidence if the sec brings action against a company for violation of disclosure or other requirements it can choose to file a case in federal court or settle the matter outside of trial history of the securities exchange act of 1934the sea of 1934 was enacted by franklin d roosevelt s administration it was a response to the widely held belief that irresponsible financial practices were one of the chief causes of the 1929 stock market crash the sea of 1934 followed the securities act of 1933 which required corporations to make public certain financial information including stock sales and distribution other regulatory measures put forth by the roosevelt administration include the public utility holding company act of 1935 the trust indenture act of 1934 the investment advisers act of 1940 and the investment company act of 1940 they all came in the wake of a financial environment in which the commerce of securities was subject to little regulation and controlling interests of corporations were amassed by relatively few investors without public knowledge creation and role of the secthe securities and exchange commission sec is the regulatory arm of the securities exchange act of 1934 the sea granted the sec broad authority to regulate all aspects of the securities industry it manages the disclosure and sharing of market related information which is designed to promote fair dealing for investors and protect against securities fraud the sec is led by five commissioners who are appointed by the president and has five divisions the sec has the power and responsibility to lead investigations into potential violations of the sea such as insider trading selling unregistered stocks stealing customers funds manipulating market prices disclosing false financial information and breaching broker customer integrity the sec manages the electronic data gathering analysis and retrieval database known as edgar 6 this database allows investors to access financial reports registration statements and other securities forms reporting requirementsunder the sea companies with publicly held securities as well as companies of a certain size are known as reporting companies this means they must make regular financial disclosures that provide investors with pertinent information about the company these disclosures include these disclosures provide investors with access to the information they need to make informed investing decisions 7in addition to companies with publicly traded securities those with more than 10 million in assets and whose shares are held by more than 500 owners must also meet reporting requirements 7areas of security law coveredin addition to regulating secondary securities markets the sea covers several other areas of securities law fraudulent insider trading is when a person trades a security based on important information that isn t available to the general public this is prohibited by the 1934 sea pools are ways to manipulate stock prices when the price of a security reaches a high point pool members coordinate to unload their shares allowing them to make a profit while prices drop dramatically the sea prohibits this kind of manipulation which was common when it was created the sea requires that anyone who wishes to make a tender offer or a direct purchase of 5 or more of a company s shares must disclose certain material information this allows shareholders to make an informed decision about these types of offers which are usually made to gain control of a company proxy materials are used to gain shareholder votes either during annual or special meetings to ensure that shareholders have all relevant information before they register their votes these materials must be filed with the sec before any vote solicitation begins 