In the United States, the public offer and sale of securities must be either registered pursuant to a registration statement that is filed with the U.S. Securities and Exchange Commission (SEC) or are offered and sold pursuant to an exemption therefrom. Dealing in securities is regulated by both federal authorities (SEC) and state securities departments. In addition, the brokerage industry is supposedly self policed by Self Regulatory Organizations (SROs), such as the Financial Industry Regulatory Authority (FINRA), formerly the National Association of Securities Dealers (or NASD) or the MSRB.
With respect to investment schemes that do not fall within the traditional categories of securities listed in the definition of a security (Sec. 2(a)(1) of the 33 act and Sec. 3(a)(10) of the 34 act) the US Courts have developed a broad definition for securities that must then be registered with the SEC. When determining if there a is an "investment contract" that must be registered the courts look for an investment of money, a common enterprise and expectation of profits to come primarily from the efforts of others. See SEC v. W.J. Howey Co. and SEC v. Turner."
Read more about this topic: Security (finance)
Famous quotes containing the word regulation:
“Nothing changes my twenty-six years in the military. I continue to love it and everything it stands for and everything I was able to accomplish in it. To put up a wall against the military because of one regulation would be doing the same thing that the regulation does in terms of negating people.”
—Margarethe Cammermeyer (b. 1942)
“Lots of white people think black people are stupid. They are stupid themselves for thinking so, but regulation will not make them smarter.”
—Stephen Carter (b. 1954)
“Nothing can be more real, or concern us more, than our own sentiments of pleasure and uneasiness; and if these be favourable to virtue and unfavourable to vice, no more can be requisite to the regulation of our conduct and behavior.”
—David Hume (17111776)