Purpose
The primary purpose of the '33 Act is to ensure that buyers of securities receive complete and accurate information before they invest. Unlike state blue sky law, which imposes merit reviews, the '33 Act embraces a disclosure philosophy, meaning that in theory, it is not illegal to sell a bad investment, as long as all the facts are accurately disclosed. A company that is required to register under the '33 act must create a registration statement, which includes a prospectus, with copious information about the security, the company, the business, including audited financial statements. The company, the underwriter and other individuals signing the registration statement are strictly liable for any inaccurate statements in the document. This extremely high level of liability exposure drives an enormous effort, known as "due diligence," to ensure that the document is complete and accurate. The law is intended to in this way help bolster and maintain investor confidence in order to support the market.
Read more about this topic: Securities Act Of 1933
Famous quotes containing the word purpose:
“Our purpose in founding the city was not to make any one class in it surpassingly happy, but to make the city as a whole as happy as possible.”
—Socrates (469–399 B.C.)
“I am firmly opposed to the government entering into any business the major purpose of which is competition with our citizens ... for the Federal Government deliberately to go out to build up and expand ... a power and manufacturing business is to break down the initiative and enterprise of the American people; it is the destruction of equality of opportunity amongst our people, it is the negation of the ideals upon which our civilization has been based.”
—Herbert Hoover (1874–1964)
“And the purpose of the many stops and starts will be made clear:
Backing into the old affair of not wanting to grow
Into the night, which becomes a house, a parting of the ways
Taking us far into sleep. A dumb love.”
—John Ashbery (b. 1927)