A security is a general term that refers to not only shares of stocks, bonds and debentures, but also a variety of interests that involve an investment with the return primarily or exclusively dependent on the efforts of a person other than the investor.
Securities law represents the multiple federal laws and regulations that govern the sale, purchase, and creation of security interests. These rules derive from a simple and straightforward concept: all investors, whether large institutions or private individuals, should have access to certain basic facts about an investment prior to buying it. Only through the steady flow of timely, comprehensive and accurate information can people make sound investment decisions.
The agency empowered with the sole responsibility of enforcing securities law throughout the United States is the Securities and Exchange Commission (SEC). The primary mission of the SEC is to protect investors and maintain the integrity of the securities markets by requiring public companies to disclose meaningful financial and other information to the public so they can evaluate security investments.
Each year the SEC brings between 400-500 civil enforcement actions against individuals and companies that break the securities laws. Typical infractions include insider trading, accounting fraud, and providing false or misleading information about securities and the companies that issue them. Securities law violations are also serious criminal infractions that can result into both incarceration and substantial fines.
Insider trading refers to transactions in securities of publicly held corporations by persons with inside or advance information on which the trading is based. Usually, the trader is an "insider" with an employment or other relationship of trust with the corporation. For example, if an employee of a corporation learns that her company will enter a merger agreement with a rival competitor, and with this knowledge purchases shares of stock with the expectation that the value will increase after the merger agreement becomes public knowledge, the employee is abusing her insider status and has engaged in insider trading.
If you have been accused of violating a U.S. securities law or regulation, you should retain the services of an attorney specializing in U.S. securities law immediately. If you have a securities question, speaking with the proper attorney may help you better understand your legal options.
Last Modified: 11-05-2015 04:49 PM PSTLaw Library Disclaimer
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