NCJ Number
207916
Journal
American Criminal Law Review Volume: 41 Issue: 2 Dated: Spring 2004 Pages: 1079-1145
Date Published
2004
Length
67 pages
Annotation
After discussing elements of offenses of the 1933 and 1934 Federal Securities Acts, this article discusses defenses under the acts' allegations, enforcement mechanisms, penalties, and recent developments.
Abstract
The Securities Act of 1933, which was the first of seven statutes enacted to regulate Federal securities transactions, was a congressional response to fraud in securities markets and the perceived lack of public information about the stock markets. The Securities and Exchange Commission (SEC) was created under the 1934 act, with one of the stated aims being to ensure vigorous market competition by mandating full and fair disclosure of all material information in the marketplace. The 1933 act regulates the primary market, and the 1934 act regulates the secondary market. Both of the acts define and prohibit various types of criminal conduct. A description of elements of offenses addresses substantive fraud, which involves material misrepresentations and omissions and insider trading; the definitions of "offer," "purchase," or "sale" of a security under the acts; and the use of interstate commerce or the mails in the course of committing fraud under the acts. The discussion of defenses under the acts addresses two broad categories of securities-fraud defenses: intent-based defenses, which attempt to show the defendant acted without the willful intent to violate the law; and reliance-based defenses, which attempt to show that no market participant relied upon the defendant's omissions or misrepresentations in deciding to purchase or sell a security. Another section of the article reviews enforcement mechanisms used by the SEC in administrative proceedings, civil remedies, and international enforcement, as well the enforcement mechanisms used to identify and investigate criminal violations. Remaining sections discuss penalties and recent developments in securities law and its application. 469 footnotes