This is “Securities Regulation”, chapter 19 from the book The Legal Environment and Business Law: Executive MBA Edition (v. 1.0). For details on it (including licensing), click here.
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After reading this chapter, you should understand the following:
In Chapter 17 "Legal Aspects of Corporate Finance", we examined state law governing a corporation’s issuance and transfer of stock. In Chapter 18 "Corporate Powers and Management", we covered the liability of directors and officers. This chapter extends and ties together the themes raised in Chapter 17 "Legal Aspects of Corporate Finance" and Chapter 18 "Corporate Powers and Management" by examining government regulation of securities and insider trading. Both the registration and the trading of securities are highly regulated by the Securities and Exchange Commission (SEC). A violation of a securities law can lead to severe criminal and civil penalties. But first we examine the question, Why is there a need for securities regulation?