关键词：Securities

China's Shanghai Composite Index Surges 9.3% on Trading Tax Cut

By Chua Kong Ho and Zhang Shidong

April 24 (Bloomberg) -- China's stocks surged, sending the Shanghai Composite Index to its biggest gain in more than six years, after the government cut the tax on equity trading to stem a slump that erased $1.7 trillion of market value.

The index rose 9.3 percent, the most since Oct. 23, 2001, with more than half its members climbing by the daily limit. The government stepped in to boost the world's fourth-largest equity market two days after the Shanghai measure sank to less than 50 percent of its October record amid concern earnings growth will slow and share sales will overwhelm demand.

``The government is clearly concerned about the meltdown,'' said James Liu, Shanghai-based deputy chief investment officer at APS Asset Management, which oversees $1 billion. ``It's positive for the market in the short run.''

Citic Securities Co., China's biggest brokerage, gained on speculation the stock market rally will boost trading income. China Life Insurance Co., the country's largest insurer, climbed on optimism gains from equity investments will increase.

The stamp duty on stock trading was reduced to 0.1 percent from 0.3 percent effective today, the government said after the close of trading yesterday, the latest in a series of measures to revive stocks.

Regulators on April 20 required shareholders selling more than 1 percent of a stock to do so in single trades, to keep the transactions off the open market. China in December tripled to $30 billion the amount overseas institutions can invest in yuan- denominated stocks and bonds. Two months later, regulators ended a five-month freeze on the sale of new mutual funds.

Televised Announcement

``In recent weeks, expectations have been mounting on the government to take decisive steps to prop up the domestic markets,'' Jing Ulrich, Hong Kong-based chairwoman of China equities at JPMorgan Chase & Co., said in an e-mail. ``The lowering of stamp duty is among the most aggressive steps the government could have taken to improve sentiment.''

The tax cut was announced on a daily national newscast by state-owned China Central Television last night in a country where individual investors have opened about 140 million accounts to trade stocks and mutual funds.

The government tripled the stamp duty last May in an attempt to cool a rally that was drawing more than 300,000 new investors a day to stocks. The CSI 300 Index, which tracks yuan- denominated shares in Shanghai and Shenzhen, surged almost sixfold in the two years through 2007.

The three-year-old index climbed 9.3 percent to 3,774.50 at the close in Shanghai, with all of its 10 industry groups rising. The gauge tumbled as much as 39 percent this year, making it the second-worst performing benchmark in the world after Vietnam.

Brokerages, Insurers

The drop has left the index valued at 21 times estimated earnings, down from 46 times on Oct. 16, when the CSI 300 closed at a record. The Chinese gauge is still more expensive than the MSCI Asia Pacific Index and the U.S. Standard & Poor's 500 Index, which both trade at about 15 times profit.

The 17-year-old Shanghai Composite Index surged 304.7 points to 3,583.03, with just one of its 888 stocks declining. More than 500 members climbed by the 10 percent daily limit. The Shenzhen Composite Index, which tracks stocks listed in the smaller of China's two exchanges, rose 8.7 percent to 1,043.8.

Financial companies including brokerages and insurers accounted for 28 percent of the CSI 300's advance today.

Citic Securities jumped 2.67 yuan, or 9.1 percent, to 32.13. Haitong Securities Co., the country's second-largest listed brokerage, added 3.55 yuan, or 10 percent, to 39.03.

China Life gained 2.99 yuan, or 10 percent, to 32.87. Ping An Insurance (Group) Co., China's second-biggest insurer, rose 6.07 yuan, or 10 percent, to 66.78. Equity securities made up 23 percent of China Life's investment portfolio in 2007, and 25 percent of Ping An's.

More Declines Ahead?

``The market has reached its bottom with the strong support from the government,'' said Chen Shide, who manages the equivalent of $2.3 billion at GF Fund Management Co. in Guangzhou. ``Whether the market will carry on the rally still rests on the fundamentals and the second-quarter economic data, which I am optimistic about.''

Shenzhen Development Bank Co., controlled by buyout firm TPG Inc., jumped 2.50 yuan, or 10 percent, to 27.49. Shandong Gold Mining Co., China's third-largest bullion producer, gained 9.79 yuan, or 8 percent, to 131.76. Both stocks climbed as they reported surges in first-quarter earnings.

Government support measures may fail to stem the declines that dragged the value of China's stock market down to $3.03 trillion yesterday from a record $4.75 trillion on Jan. 14. Higher costs and slowing earnings growth are likely to continue dogging the market, said APS Asset's Liu.

Chinese consumer prices rose 8.3 percent in March as food costs jumped and after the worst snowstorms in half a century destroyed crops and paralyzed transport. Price caps on fuel and electricity have hurt earnings at refiners and power companies as crude oil trades near record highs.

``There are still concerns about the growth of the economy,'' said Liu. ``We've seen analysts revising down their forecasts because of rising input costs and weak external demand.''

To contact the reporter on this story: Chua Kong Ho in Shanghai at kchua6@bloomberg.net; Zhang Shidong in Shanghai at szhang5@bloomberg.net.

securities law: an overview
Securities law exists because of unique informational needs of investors. Securities are not inherently valuable; their worth comes only from the claims they entitle their owner to make upon the assets and earnings of the issuer, or the voting power that accompanies such claims. The value of securities depends on the issuer's financial condition, products and markets, management, and competitive and regulatory climate. Securities laws attempt to ensure that investors have accurate information of the type of interest they are purchasing and its value.

Securities exist in form of notes, stocks, treasury stocks, bonds, certificates of interest or participation in profit sharing agreements, collateral trust certificates, preorganization certificates or subscriptions, transferable shares, investment contracts, voting trust certificates, certificates of deposit for a security, and a fractional undivided interest in gas, oil, or other mineral rights. Certain types of notes, such as a note secured by a home mortgage or a note secured by accounts receivable or other business assets are not securities.

There are two principle settings for buying and selling securities: issuer transactions and trading transactions. Issuer transactions are the means by which businesspeople raise capital and involve the sale of securities by the issuer to investor. Trading transactions are the purchasing and selling of outstanding securities among investors. Outstanding securities are traded through securities markets that can be either stock exchanges or "over-the-counter".

A stock exchange provides a place, rules, and procedures for buying and selling securities. Generally, to have their securities sold and bought on a stock exchange, a company must list its securities on a given exchange. Stock exchange rules are subject to approval by the Securities and Exchange Commission (SEC). All transactions that do not take place on a stock exchange are said to be executed in the over-the-counter market, which is the residual securities market. Only dealers and brokers who are registered with the SEC may engage in securities business both on stock exchanges and over-the-couner market. Most of the broker-dealers serving the public are members of the National Association of Securities Dealers (NASD), a national securities association registered with SEC.

Securities regulations focus mainly on the market for common stocks. Both federal and state laws regulate securities. Federal securities laws are generally administrated by the Security and Exchange Commission, which was established by the Securities Exchange Act of 1934. The first of the federal securities laws enacted was the Federal Securities Act of 1933, which regulates the public offering and sale of securities in interstate commerce. The 1933 Act prohibits the offer or sale of a security not registered with the Securities Exchange Commission and requires the disclosure of certain information to the prospective security's purchaser. The objective of the 1933 Act's registration requirements is to enable a purchaser to make a reasoned decision based on reliable information.

Securities Exchange Act of 1934 requires that issuers, subject to certain exemptions, register with SEC if they want to have their securities traded on a national exchange. Issuers of securities registered under the 1934 Act must file various reports with SEC in order to provide the public with adequate information about companies with publicly traded stocks. The 1934 Act also regulates proxy solicitation and requires that certain information be given to a corporation's shareholders as a prerequisite to soliciting votes. The 1934 Act permits the SEC to promulgate rules and regulations to protect the public and investors by prohibiting manipulative or deceptive devices or contrivances via mails or other means of interstate commerce. Rule 10b-5 of The 1934 Act protects against insidertrading.

State securities law are commonly known as Blue Sky Laws. Typical provisions include prohibition against fraud in the sale of securities, registration requirements for brokers and dealers, registration requirements for securities to be sold within the state, and sanctions and civil liability. A majority of states,with the exception of New York and California, have adopted the Uniform Securities Act, at least in part.

See also Corporations

The Investor's Advocate:
How the SEC Protects Investors, Maintains Market Integrity, and Facilitates Capital Formation

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  Introduction
  Creation of the SEC
  Organization of the SEC
  Laws That Govern the Industry
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Introduction
The mission of the U.S. Securities and Exchange Commission is to protect investors, maintain fair, orderly, and efficient markets, and facilitate capital formation.

As more and more first-time investors turn to the markets to help secure their futures, pay for homes, and send children to college, our investor protection mission is more compelling than ever.

As our nation's securities exchanges mature into global for-profit competitors, there is even greater need for sound market regulation.

And the common interest of all Americans in a growing economy that produces jobs, improves our standard of living, and protects the value of our savings means that all of the SEC's actions must be taken with an eye toward promoting the capital formation that is necessary to sustain economic growth.

The world of investing is fascinating and complex, and it can be very fruitful. But unlike the banking world, where deposits are guaranteed by the federal government, stocks, bonds and other securities can lose value. There are no guarantees. That's why investing is not a spectator sport. By far the best way for investors to protect the money they put into the securities markets is to do research and ask questions.

The laws and rules that govern the securities industry in the United States 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, and so long as they hold it. To achieve this, the SEC requires public companies to disclose meaningful financial and other information to the public. This provides a common pool of knowledge for all investors to use to judge for themselves whether to buy, sell, or hold a particular security. Only through the steady flow of timely, comprehensive, and accurate information can people make sound investment decisions.

The result of this information flow is a far more active, efficient, and transparent capital market that facilitates the capital formation so important to our nation's economy. To insure that this objective is always being met, the SEC continually works with all major market participants, including especially the investors in our securities markets, to listen to their concerns and to learn from their experience.

The SEC oversees the key participants in the securities world, including securities exchanges, securities brokers and dealers, investment advisors, and mutual funds. Here the SEC is concerned primarily with promoting the disclosure of important market-related information, maintaining fair dealing, and protecting against fraud.

Crucial to the SEC's effectiveness in each of these areas is its enforcement authority. Each year the SEC brings hundreds of civil enforcement actions against individuals and companies for violation of the securities laws. Typical infractions include insider trading, accounting fraud, and providing false or misleading information about securities and the companies that issue them.

One of the major sources of information on which the SEC relies to bring enforcement action is investors themselves — another reason that educated and careful investors are so critical to the functioning of efficient markets. To help support investor education, the SEC offers the public a wealth of educational information on this Internet website, which also includes the EDGAR database of disclosure documents that public companies are required to file with the Commission.

Though it is the primary overseer and regulator of the U.S. securities markets, the SEC works closely with many other institutions, including Congress, other federal departments and agencies, the self-regulatory organizations (e.g. the stock exchanges), state securities regulators, and various private sector organizations. In particular, the Chairman of the SEC, together with the Chairman of the Federal Reserve, the Secretary of the Treasury, and the Chairman of the Commodities Futures Trading Commission, serves as a member of the President's Working Group on Financial Markets.

This article is an overview of the SEC's history, responsibilities, activities, organization, and operation. More detailed information about many of these topics is available throughout this website.

Creation of the SEC
The SEC's foundation was laid in an era that was ripe for reform. Before the Great Crash of 1929, there was little support for federal regulation of the securities markets. This was particularly true during the post-World War I surge of securities activity. Proposals that the federal government require financial disclosure and prevent the fraudulent sale of stock were never seriously pursued.

Tempted by promises of "rags to riches" transformations and easy credit, most investors gave little thought to the systemic risk that arose from widespread abuse of margin financing and unreliable information about the securities in which they were investing. During the 1920s, approximately 20 million large and small shareholders took advantage of post-war prosperity and set out to make their fortunes in the stock market. It is estimated that of the $50 billion in new securities offered during this period, half became worthless.



President Franklin D. Roosevelt




Joseph Kennedy


When the stock market crashed in October 1929, public confidence in the markets plummeted. Investors large and small, as well as the banks who had loaned to them, lost great sums of money in the ensuing Great Depression. There was a consensus that for the economy to recover, the public's faith in the capital markets needed to be restored. Congress held hearings to identify the problems and search for solutions.

Based on the findings in these hearings, Congress — during the peak year of the Depression — passed the Securities Act of 1933. This law, together with the Securities Exchange Act of 1934, which created the SEC, was designed to restore investor confidence in our capital markets by providing investors and the markets with more reliable information and clear rules of honest dealing. The main purposes of these laws can be reduced to two common-sense notions:

Companies publicly offering securities for investment dollars must tell the public the truth about their businesses, the securities they are selling, and the risks involved in investing.
 
People who sell and trade securities ?brokers, dealers, and exchanges ?must treat investors fairly and honestly, putting investors' interests first.
Monitoring the securities industry requires a highly coordinated effort. Congress established the Securities and Exchange Commission in 1934 to enforce the newly-passed securities laws, to promote stability in the markets and, most importantly, to protect investors. President Franklin Delano Roosevelt appointed Joseph P. Kennedy, President John F. Kennedy's father, to serve as the first Chairman of the SEC.

Organization of the SEC
The SEC consists of five presidentially-appointed Commissioners, with staggered five-year terms (see SEC Organization Chart; text version also available). One of them is designated by the President as Chairman of the Commission — the agency's chief executive. By law, no more than three of the Commissioners may belong to the same political party, ensuring non-partisanship. The agency's functional responsibilities are organized into four Divisions and 18 Offices, each of which is headquartered in Washington, DC. The Commission's approximately 3,800 staff are located in Washington and in 11 Regional Offices throughout the country.

It is the responsibility of the Commission to:

interpret federal securities laws;
 
issue new rules and amend existing rules;
 
oversee the inspection of securities firms, brokers, investment advisers, and ratings agencies;
 
oversee private regulatory organizations in the securities, accounting, and auditing fields; and
 
coordinate U.S. securities regulation with federal, state, and foreign authorities.
The Commission convenes regularly at meetings that are open to the public and the news media unless the discussion pertains to confidential subjects, such as whether to begin an enforcement investigation.

Divisions
Division of Corporation Finance
The Division of Corporation Finance assists the Commission in executing its responsibility to oversee corporate disclosure of important information to the investing public. Corporations are required to comply with regulations pertaining to disclosure that must be made when stock is initially sold and then on a continuing and periodic basis. The Division's staff routinely reviews the disclosure documents filed by companies. The staff also provides companies with assistance interpreting the Commission's rules and recommends to the Commission new rules for adoption.








The Division of Corporation Finance reviews documents that publicly-held companies are required to file with the Commission. The documents include:


registration statements for newly-offered securities;

annual and quarterly filings (Forms 10-K and 10-Q);

proxy materials sent to shareholders before an annual meeting;

annual reports to shareholders;

documents concerning tender offers (a tender offer is an offer to buy a large number of shares of a corporation, usually at a premium above the current market price); and

filings related to mergers and acquisitions.
These documents disclose information about the companies' financial condition and business practices to help investors make informed investment decisions. Through the Division's review process, the staff checks to see if publicly-held companies are meeting their disclosure requirements and seeks to improve the quality of the disclosure. To meet the SEC's requirements for disclosure, a company issuing securities or whose securities are publicly traded must make available all information, whether it is positive or negative, that might be relevant to an investor's decision to buy, sell, or hold the security.

Corporation Finance provides administrative interpretations of the Securities Act of 1933, the Securities Exchange Act of 1934, and the Trust Indenture Act of 1939, and recommends regulations to implement these statutes. Working closely with the Office of the Chief Accountant, the Division monitors the activities of the accounting profession, particularly the Financial Accounting Standards Board (FASB), that result in the formulation of generally accepted accounting principles (GAAP). Increasingly, the Division also monitors the use by U.S. registrants of International Financial Reporting Standards (IFRS), promulgated by the International Accounting Standards Board.

The Division's staff provides guidance and counseling to registrants, prospective registrants, and the public to help them comply with the law. For example, a company might ask whether the offering of a particular security requires registration with the SEC. Corporation Finance would share its interpretation of the relevant securities regulations with the company and give it advice on compliance with the appropriate disclosure requirement.

The Division uses no-action letters to issue guidance in a more formal manner. A company seeks a no-action letter from the staff of the SEC when it plans to enter uncharted legal territory in the securities industry. For example, if a company wants to try a new marketing or financial technique, it can ask the staff to write a letter indicating whether it would or would not recommend that the Commission take action against the company for engaging in its new practice.

How the SEC Rulemaking Process Works
Rulemaking is the process by which federal agencies implement legislation passed by Congress and signed into law by the President. Major pieces of legislation, such as the Securities Act of 1933, the Securities Exchange Act of 1934, the Investment Company Act of 1940, and the Sarbanes-Oxley Act, provide the framework for the SEC's oversight of the securities markets. These statutes are broadly drafted, establishing basic principles and objectives. To ensure that the intent of Congress is carried out in specific circumstances — and as the securities markets evolve technologically, expand in size, and offer new products and services — the SEC engages in rulemaking.

Rulemaking can involve several steps: concept release, rule proposal, and rule adoption.

Concept Release: The rulemaking process usually begins with a rule proposal, but sometimes an issue is so unique and/or complicated that the Commission seeks out public input on which, if any, regulatory approach is appropriate. A concept release is issued describing the area of interest and the Commission's concerns and usually identifying different approaches to addressing the problem, followed by a series of questions that seek the views of the public on the issue. The public's feedback is taken into consideration as the Commission decides which approach, if any, is appropriate.

Rule Proposal: The Commission publishes a detailed formal rule proposal for public comment. Unlike a concept release, a rule proposal advances specific objectives and methods for achieving them. Typically the Commission provides between 30 and 60 days for review and comment. Just as with a concept release, the public comment is considered vital to the formulation of a final rule.

Rule Adoption: Finally, the Commissioners consider what they have learned from the public exposure of the proposed rule, and seek to agree on the specifics of a final rule. If a final measure is then adopted by vote of the full Commission, it becomes part of the official rules that govern the securities industry.


Division of Trading and Markets
The Division of Trading and Markets assists the Commission in executing its responsibility for maintaining fair, orderly, and efficient markets. The staff of the Division provide day-to-day oversight of the major securities market participants: the securities exchanges; securities firms; self-regulatory organizations (SROs) including the Financial Industry Regulatory Authority (FInRA), the Municipal Securities Rulemaking Board (MSRB), clearing agencies that help facilitate trade settlement; transfer agents (parties that maintain records of securities owners); securities information processors; and credit rating agencies.

The Division also oversees the Securities Investor Protection Corporation (SIPC), which is a private, non-profit corporation that insures the securities and cash in the customer accounts of member brokerage firms against the failure of those firms. It is important to remember that SIPC insurance does not cover investor losses arising from market declines or fraud.

The Division's additional responsibilities include:

carrying out the Commission's financial integrity program for broker-dealers;
 
reviewing (and in some cases approving, under authority delegated from the Commission) proposed new rules and proposed changes to existing rules filed by the SROs;
 
assisting the Commission in establishing rules and issuing interpretations on matters affecting the operation of the securities markets; and
 
surveilling the markets.
Division of Investment Management
The Division of Investment Management assists the Commission in executing its responsibility for investor protection and for promoting capital formation through oversight and regulation of America's $26 trillion investment management industry. This important part of the U.S. capital markets includes mutual funds and the professional fund managers who advise them; analysts who research individual assets and asset classes; and investment advisers to individual customers. Because of the high concentration of individual investors in the mutual funds, exchange-traded funds, and other investments that fall within the Division's purview, the Division of Investment Management is focused on ensuring that disclosures about these investments are useful to retail customers, and that the regulatory costs which consumers must bear are not excessive.

The Division's additional responsibilities include:

assisting the Commission in interpreting laws and regulations for the public and SEC inspection and enforcement staff;
 
responding to no-action requests and requests for exemptive relief;
 
reviewing investment company and investment adviser filings;
 
assisting the Commission in enforcement matters involving investment companies and advisers; and
 
advising the Commission on adapting SEC rules to new circumstances.
Division of Enforcement
First and foremost, the SEC is a law enforcement agency. The Division of Enforcement assists the Commission in executing its law enforcement function by recommending the commencement of investigations of securities law violations, by recommending that the Commission bring civil actions in federal court or before an administrative law judge, and by prosecuting these cases on behalf of the Commission. As an adjunct to the SEC's civil enforcement authority, the Division works closely with law enforcement agencies in the U.S. and around the world to bring criminal cases when appropriate.

The Division obtains evidence of possible violations of the securities laws from many sources, including market surveillance activities, investor tips and complaints, other Divisions and Offices of the SEC, the self-regulatory organizations and other securities industry sources, and media reports.

All SEC investigations are conducted privately. Facts are developed to the fullest extent possible through informal inquiry, interviewing witnesses, examining brokerage records, reviewing trading data, and other methods. Once the Commission issues a formal order of investigation, the Division's staff may compel witnesses by subpoena to testify and produce books, records, and other relevant documents. Following an investigation, SEC staff present their findings to the Commission for its review. The Commission can authorize the staff to file a case in federal court or bring an administrative action. In many cases, the Commission and the party charged decide to settle a matter without trial.

Common violations that may lead to SEC investigations include:
misrepresentation or omission of important information about securities;
 
manipulating the market prices of securities;
 
stealing customers' funds or securities;
 
violating broker-dealers' responsibility to treat customers fairly;
 
insider trading (violating a trust relationship by trading on material, non-public information about a security); and
 
selling unregistered securities.


Whether the Commission decides to bring a case in federal court or within the SEC before an administrative law judge may depend upon the type of sanction or relief that is being sought. For example, the Commission may bar someone from the brokerage industry in an administrative proceeding, but an order barring someone from acting as a corporate officer or director must be obtained in federal court. Often, when the misconduct warrants it, the Commission will bring both proceedings.

Civil action: The Commission files a complaint with a U.S. District Court and asks the court for a sanction or remedy. Often the Commission asks for a court order, called an injunction, that prohibits any further acts or practices that violate the law or Commission rules. An injunction can also require audits, accounting for frauds, or special supervisory arrangements. In addition, the SEC can seek civil monetary penalties, or the return of illegal profits (called disgorgement). The court may also bar or suspend an individual from serving as a corporate officer or director. A person who violates the court's order may be found in contempt and be subject to additional fines or imprisonment.
 
Administrative action: The Commission can seek a variety of sanctions through the administrative proceeding process. Administrative proceedings differ from civil court actions in that they are heard by an administrative law judge (ALJ), who is independent of the Commission. The administrative law judge presides over a hearing and considers the evidence presented by the Division staff, as well as any evidence submitted by the subject of the proceeding. Following the hearing the ALJ issues an initial decision that includes findings of fact and legal conclusions. The initial decision also contains a recommended sanction. Both the Division staff and the defendant may appeal all or any portion of the initial decision to the Commission. The Commission may affirm the decision of the ALJ, reverse the decision, or remand it for additional hearings. Administrative sanctions include cease and desist orders, suspension or revocation of broker-dealer and investment advisor registrations, censures, bars from association with the securities industry, civil monetary penalties, and disgorgement.

Offices
Office of the General Counsel
The General Counsel is appointed by the Chairman as the chief legal officer of the Commission, with overall responsibility for the establishment of agency policy on legal matters. The General Counsel serves as the chief legal advisor to the Chairman regarding all legal matters and services performed within, or involving, the agency, and provides legal advice to the Commissioners, the Divisions, the Offices, and other SEC components as appropriate.

The General Counsel represents the SEC in civil, private, or appellate proceedings as appropriate, including appeals from the decisions of the federal district courts or the Commission in enforcement matters, and appeals from the denial of requests under the Freedom of Information Act. Through its amicus curiae program, the General Counsel often intervenes in private appellate litigation involving novel or important interpretations of the securities laws, and the Office is responsible for coordinating with the Department of Justice in the preparation of briefs on behalf of the United States involving matters in which the SEC has an interest.

The General Counsel is also responsible for determining the adherence by attorneys in the SEC to appropriate professional standards, as well as for providing advice on standards of conduct to Commissioners and staff, as appropriate. It is responsible for the final drafting of all proposed legislation that the Chairman or the Commission choose to submit for consideration to the Congress or the states, and for coordinating the SEC staff positions on such legislation.

Office of the Chief Accountant


The Chief Accountant is appointed by the Chairman to be the principal adviser to the Commission on accounting and auditing matters. The Office of the Chief Accountant assists the Commission in executing its responsibility under the securities laws to establish accounting principles, and for overseeing the private sector standards-setting process. The Office works closely with the Financial Accounting Standards Board, to which the SEC has delegated authority for accounting standards setting, as well as the International Accounting Standards Board and the American Institute of Certified Public Accountants.

In addition to its responsibility for accounting standards, the Commission is responsible for the approval or disapproval of auditing rules put forward by the Public Company Accounting Oversight Board, a private-sector regulator established by the Sarbanes-Oxley Act to oversee the auditing profession. The Commission also has thorough-going oversight responsibility for all of the activities of the PCAOB, including approval of its annual budget. To assist the Commission in the execution of these responsibilities, the Office of the Chief Accountant is the principal liaison with the PCAOB. The Office also consults with registrants and auditors on a regular basis regarding the application of accounting and auditing standards and financial disclosure requirements.

Because of its expertise and ongoing involvement with questions concerning the financial books and records of public companies registered with the SEC, the Office of the Chief Accountant is often called upon to assist in addressing issues that arise in the context of Commission enforcement actions.



Office of Economic Analysis
The Chief Economist, who directs the activities of the Office of Economic Analysis, is appointed by the Chairman to be the principal adviser to the Commission on economics matters — including specifically the agency's legal obligation to assess whether its regulations provide benefits to the nation's investors and markets that exceed the costs. The Office of Economic Analysis advises the Commission and its staff on the economic aspects of all of the SEC's regulatory initiatives. The Office periodically conducts studies on specific rules, and engages in long-term research and policy planning on an ongoing basis. The Office assists the Commission in analyzing the incidence of investor harm in enforcement cases, and evaluates market data and trends to assist in targeting enforcement, examination, and inspection resources on the basis of relative risk.

Office of Compliance Inspections and Examinations
The Office of Compliance Inspections and Examinations administers the SEC's nationwide examination and inspection program for registered self-regulatory organizations, broker-dealers, transfer agents, clearing agencies, investment companies, and investment advisers. The Office conducts inspections to foster compliance with the securities laws, to detect violations of the law, and to keep the Commission informed of developments in the regulated community. Among the more important goals of the examination program is the quick and informal correction of compliance problems. When the Office finds deficiencies, it issues a "deficiency letter" identifying the problems that need to be rectified and monitor the situation until compliance is achieved. Violations that appear too serious for informal correction are referred to the Division of Enforcement.
Office of International Affairs
The SEC works extensively in the international arena to promote cooperation among national securities regulatory agencies, and to encourage the maintenance of high regulatory standards worldwide. The Office of International Affairs assists the Chairman and the Commission in the development and implementation of the SEC's international regulatory and enforcement initiatives. The Office negotiates bilateral and multilateral agreements for Commission approval on such subjects as regulatory cooperation and enforcement assistance, and oversees the implementation of such arrangements. It is also responsible for advancing the Commission's agenda in international meetings and organizations. The Office also conducts a technical assistance program for countries with emerging securities markets, which includes training both in the United States and in the requesting country. Over 100 countries currently participate in this program.
Office of Investor Education and Advocacy
The Office of Investor Education and Advocacy assists the Commission in ensuring that in all of the agency's activities, the SEC is truly "the Investor's Advocate." The Office serves individual investors by seeing to it that their problems and concerns are known throughout the SEC and considered the first priority whenever the agency takes action. The Office has four main functional areas:

The Office of Policy and Investor Outreach has responsibility for reviewing all formal agency action from the perspective of the individual investor, including conducting investor surveys and focus groups. It plays a leading role in the Commission's efforts to ensure that investor disclosures are written in plain English, as well as as the agency's technology initiatives such as providing increasingly more investor information in "interactive data" format.

The Office of Investor Advocacy has responsibility for acting on investor tips, complaints and suggestions. Tens of thousands of investors contact the SEC each year using the agency's online forms or our (800) SEC-0330 hotline (toll-free in U.S.) to ask questions on a wide range of securities-related topics, to complain about problems with their investments or their financial professionals, or to suggest improvements to the agency's regulations and procedures. Trained SEC specialists and attorneys in the Office of Investor Advocacy provide these investors with information, seek informal resolutions of their complaints, and pass on their good ideas to the Commission and appropriate agency's staff. Tips concerning possible law violations are passed on to the Enforcement Division for investigation. And trend information from investor reports of illegal or abnormal activity provides critical intelligence to other SEC offices and divisions. Investors can use the agency's online forms to file a complaint or ask a question.

The Office of Investor Education carries out the SEC's investor education program, which includes producing and distributing educational materials, participating in educational seminars and investor-oriented events, and partnering with federal agencies, state regulators, consumer groups, industry associations, and others on financial literacy initiatives. With the impending retirement of some 76 million Baby Boomers, one of the primary focuses of these educational efforts is the prevention of fraud against seniors.

The Office of Public Documents answers public requests for information, including those under the Freedom of Information Act (FOIA), and executes the agency's responsibilities under the Privacy Act. The Office makes all of the SEC's public records — including registration statements and reports filed by regulated companies and individuals, SEC decisions and releases, staff manuals, no-action and interpretive letters, and public comments on proposed rules — available through the Public Reference facilities located at SEC Headquarters (and many of these documents are also available on the SEC web site at http://www.sec.gov). The Office also handles public requests for non-public records, such as records compiled in investigations, consumer complaints, and staff comment letters, under FOIA. The Office will release non-public records unless they are protected by an exemption in FOIA. In cases where the staff can reasonably segregate or delete exempt information from a requested record, they will honor the request for the rest of the record. For complete information on how to make a Freedom of Information Act request, please go to http://www.sec.gov/foia.shtml. For complete information on requesting documents, please see "How to Request Public Documents."

Office of Information Technology


The Office of Information Technology supports the Commission and staff of the SEC in all aspects of information technology. The Office has overall management responsibility for the Commission's IT program including application development, infrastructure operations and engineering, user support, IT program management, capital planning, security, and enterprise architecture. The Office operates the Electronic Data Gathering Analysis and Retrieval (EDGAR) system, which electronically receives, processes, and disseminates more than 500,000 financial statements every year. The Office also maintains a very active website that contains a wealth of information about the Commission and the securities industry, and also hosts the EDGAR database for free public access.

Office of the Executive Director
The Office of the Executive Director assists the Chairman in developing and executing the management policies of the SEC. The Office formulates budget and authorization strategies, supervises the allocation and use of SEC resources, promotes management controls and financial integrity, manages the administrative support offices, and oversees the development and implementation of the SEC's automated information systems. The Office has three main functional areas:

The Office of Financial Management administers the financial management and budget functions of the SEC. The Office assists the Chairman and the Executive Director in formulating budget and authorization requests, monitors the utilization of agency resources, and develops, oversees, and maintains SEC financial systems. These activities include cash management, accounting, fee collections, travel policy development, and oversight and budget justification and execution.



The Office of Human Resources assists the Chairman in recruiting and retaining the best and the brightest professional staff in the federal workforce, and in ensuring that the SEC remains the employer of choice within the federal government. The Office has overall responsibility for the strategic management of the SEC's human capital. In addition, it is responsible for ensuring compliance with all federal regulations for the following areas: recruitment, staffing, retention, and separation; position management and classification; compensation and benefits counseling and processing; leadership and employee development; performance management and awards; employee relations; labor relations; the SEC's disability, work/life, and telework programs; employee records processing and maintenance; and employee financial disclosure. The Office also represents the Commission as the liaison to the U.S. Office of Personnel Management and other Federal Government agencies, various public and private-sector professional human resources organizations, and educational institutions in matters relating to human capital management.

The Office of Administrative Services assists the Chairman and the Executive Director in managing the agency's facilities and assets, and provides a wide range of support services to the SEC staff. The Office serves the Headquarters Office and all Regional Office locations on matters including procurement and contracting, physical security, emergency management, property management, office lease acquisition and administration, space renovation, supplies and office equipment management, transportation, mail distribution, publications, printing, and desktop publishing.

Office of Risk Assessment
The Office of Risk Assessment helps the SEC anticipate, identify, and manage risks, focusing on early identification of new or resurgent forms of fraud and illegal or questionable activities. ORA focuses on risk issues across the corporate and financial sector, including issues relevant to corporate disclosure, market operation, sales practices, new product innovation, and other activities of financial market participants. ORA analyzes information from a variety of sources, such as external experts, domestic and foreign agencies, industry and financial services, empirical data and other market data. The Office develops and maintains the overall process for risk assessment throughout the SEC and serves as a resource for divisions and other offices in their risk assessment efforts, working closely with them as they work to identify, prioritize and mitigate risks.

Office of Legislative Affairs and Intergovernmental Relations


The Office of Legislative Affairs and Intergovernmental Relations serves as the agency's formal liaison with the Congress, other Executive Branch agencies, and state and local governments. The staff carefully monitor ongoing legislative activities and initiatives on Capitol Hill that affect the Commission and its mission. Through regular communication and consultation with House and Senate members and staff, the Office communicates legislators' goals to the agency, and communicates the agency's own regulatory and management initiatives to the Congress.

The Office is responsible for responding to congressional requests for testimony of SEC officials, as well as requests for documents, technical assistance, and other information. In addition, the Office monitors legislative and oversight hearings that pertain to the securities markets and the protection of investors, even when an SEC witness is not present.

Additional Information About the SEC

Addresses of SEC Offices
Across the U.S.

Useful Telephone Numbers
at the SEC

SEC Organization Chart

2006 Annual Report of the Commission

The SEC News Digest
(daily bulletin of SEC business and activities)

Office of Public Affairs
The Office of Public Affairs assists the Commission in making the work of the SEC open to the public, understandable to investors, and accountable to taxpayers. It helps every other SEC Division and Office accomplish the agency's overall mission — to protect investors, maintain fair, orderly, and efficient markets, and facilitate capital formation. The Office coordinates the agency's relations with the media and the general public, in this country and around the world.

In addition to publicizing the work of the Commission and its staff, the Office assists in the enforcement of the Commission's policy concerning the confidentiality of law enforcement and investigative information, which is designed to protect the privacy rights of American citizens. The Office reviews and distributes within the agency press coverage of the SEC and of Commission-related issues, including the securities industry and the financial markets. It also provides limited research where policy and public affairs goals overlap.

Office of the Secretary
The Secretary of the Commission is appointed by the Chairman, and is responsible for the procedural administration of Commission meetings, rulemaking, practice, and procedure. Among the responsibilities of the Office are the scheduling and recording of public and non-public meetings of the Commission; the administration of the process by which the Commission takes action without a meeting (called the seriatim process); the administration of the duty-officer process (by which a single Commissioner is designated to authorize emergency action); the maintenance of records of Commission actions; and the maintenance of records of financial judgments in enforcement proceedings. The Office also provides advice to the Commission and the staff on questions of practice and procedure.

The Office reviews all SEC documents submitted by the staff to the Commission. These include rulemaking releases, SEC enforcement orders and litigation releases, SRO rulemaking notices and orders, and actions taken by SEC staff pursuant to delegated authority. In addition, it receives and tracks documents filed in administrative proceedings, requests for confidential treatment, and comment letters on rule proposals. The Office is responsible for publishing official documents and releases of Commission actions in the Federal Register and the SEC Docket, and it posts them on the SEC Internet website, www.sec.gov. The Office also monitors compliance with the Government in the Sunshine Act.

Office of Equal Employment Opportunity
Because the SEC's employees are its most important resource, the Office of Equal Employment Opportunity works to ensure that the agency's professional staff come from diverse backgrounds that reflect the diversity of the investing public. Equal employment opportunity at the SEC is a continuing commitment. To maintain neutrality in resolving disputes, the EEO Office is independent of any other SEC office. The EEO Director reports to the Chairman. The primary mission of the EEO Office is to prevent employment discrimination, including discriminatory harassment, so that all SEC employees have the working environment to support them in their efforts to protect investors, maintain healthy markets, and promote capital formation.

Office of the Inspector General
The Office of the Inspector General conducts internal audits and investigations of SEC programs and operations. Through these audits and investigations, the Inspector General seeks to identify and mitigate operational risks, enhance government integrity, and improve the efficiency and effectiveness of SEC programs.

Office of Administrative Law Judges
The Commission's Office of Administrative Law Judges consists of independent judicial officers who conduct hearings and rule on allegations of securities law violations in cases initiated by the Commission. When the Commission initiates a public administrative proceeding, it refers the cases to the Office, where it is assigned to an individual Administrative Law Judge (ALJ). The ALJ then conducts a public hearing that is similar to a non-jury trial in the federal courts. Just as a federal judge can do, an ALJ issues subpoenas, rules on motions, and rules on the admissibility of evidence. At the conclusion of the hearing, the parties submit proposed findings of fact and conclusions of law. The ALJ prepares an initial decision that includes factual findings and legal conclusions that are matters of public record. Parties may appeal an initial decision to the Commission, which can affirm, reverse, modify, set aside or remand for further proceedings. Appeals from Commission action are to a United States Court of Appeals.

The Laws That Govern the Securities Industry
Securities Act of 1933
Often referred to as the "truth in securities" law, the Securities Act of 1933 has two basic objectives:


require that investors receive financial and other significant information concerning securities being offered for public sale; and

prohibit deceit, misrepresentations, and other fraud in the sale of securities.
The full text of this Act is available at: http://www.sec.gov/about/laws/sa33.pdf.


Purpose of Registration
A primary means of accomplishing these goals is the disclosure of important financial information through the registration of securities. This information enables investors, not the government, to make informed judgments about whether to purchase a company's securities. While the SEC requires that the information provided be accurate, it does not guarantee it. Investors who purchase securities and suffer losses have important recovery rights if they can prove that there was incomplete or inaccurate disclosure of important information.


The Registration Process


In general, securities sold in the U.S. must be registered. The registration forms companies file provide essential facts while minimizing the burden and expense of complying with the law. In general, registration forms call for:


a description of the company's properties and business;

a description of the security to be offered for sale;

information about the management of the company; and

financial statements certified by independent accountants.
All companies, both domestic and foreign, must file their registration statements electronically. These statements and the accompanying prospectuses become public shortly after filing, and investors can access them using EDGAR. Registration statements are subject to examination for compliance with disclosure requirements.

Not all offerings of securities must be registered with the Commission. Some exemptions from the registration requirement include:


private offerings to a limited number of persons or institutions;

offerings of limited size;

intrastate offerings; and

securities of municipal, state, and federal governments.
By exempting many small offerings from the registration process, the SEC seeks to foster capital formation by lowering the cost of offering securities to the public.


Securities Exchange Act of 1934
With this Act, Congress created the Securities and Exchange Commission. The Act empowers the SEC with broad authority over all aspects of the securities industry. This includes the power to register, regulate, and oversee brokerage firms, transfer agents, and clearing agencies as well as the nation's securities self regulatory organizations (SROs). The various stock exchanges, such as the New York Stock Exchange, and American Stock Exchange are SROs. The National Association of Securities Dealers, which operates the NASDAQ system, is also an SRO.

The Act also identifies and prohibits certain types of conduct in the markets and provides the Commission with disciplinary powers over regulated entities and persons associated with them.

The Act also empowers the SEC to require periodic reporting of information by companies with publicly traded securities.


Corporate Reporting
Companies with more than $10 million in assets whose securities are held by more than 500 owners must file annual and other periodic reports. These reports are available to the public through the SEC's EDGAR database.


Proxy Solicitations
The Securities Exchange Act also governs the disclosure in materials used to solicit shareholders' votes in annual or special meetings held for the election of directors and the approval of other corporate action. This information, contained in proxy materials, must be filed with the Commission in advance of any solicitation to ensure compliance with the disclosure rules. Solicitations, whether by management or shareholder groups, must disclose all important facts concerning the issues on which holders are asked to vote.


Tender Offers
The Securities Exchange Act requires disclosure of important information by anyone seeking to acquire more than 5 percent of a company's securities by direct purchase or tender offer. Such an offer often is extended in an effort to gain control of the company. As with the proxy rules, this allows shareholders to make informed decisions on these critical corporate events.


Insider Trading
The securities laws broadly prohibit fraudulent activities of any kind in connection with the offer, purchase, or sale of securities. These provisions are the basis for many types of disciplinary actions, including actions against fraudulent insider trading. Insider trading is illegal when a person trades a security while in possession of material nonpublic information in violation of a duty to withhold the information or refrain from trading.


Registration of Exchanges, Associations, and Others


The Act requires a variety of market participants to register with the Commission, including exchanges, brokers and dealers, transfer agents, and clearing agencies. Registration for these organizations involves filing disclosure documents that are updated on a regular basis.

The exchanges and the National Association of Securities Dealers (NASD) are identified as self-regulatory organizations (SRO). SROs must create rules that allow for disciplining members for improper conduct and for establishing measures to ensure market integrity and investor protection. SRO proposed rules are published for comment before final SEC review and approval.

The full text of this Act can be read at: http://www.sec.gov/about/laws/sea34.pdf.

Trust Indenture Act of 1939
This Act applies to debt securities such as bonds, debentures, and notes that are offered for public sale. Even though such securities may be registered under the Securities Act, they may not be offered for sale to the public unless a formal agreement between the issuer of bonds and the bondholder, known as the trust indenture, conforms to the standards of this Act. The full text of this Act can be read at: http://www.sec.gov/about/laws/tia39.pdf.

Investment Company Act of 1940
This Act regulates the organization of companies, including mutual funds, that engage primarily in investing, reinvesting, and trading in securities, and whose own securities are offered to the investing public. The regulation is designed to minimize conflicts of interest that arise in these complex operations. The Act requires these companies to disclose their financial condition and investment policies to investors when stock is initially sold and, subsequently, on a regular basis. The focus of this Act is on disclosure to the investing public of information about the fund and its investment objectives, as well as on investment company structure and operations. It is important to remember that the Act does not permit the SEC to directly supervise the investment decisions or activities of these companies or judge the merits of their investments. The full text of this Act is available at: http://www.sec.gov/about/laws/ica40.pdf.

Investment Advisers Act of 1940
This law regulates investment advisers. With certain exceptions, this Act requires that firms or sole practitioners compensated for advising others about securities investments must register with the SEC and conform to regulations designed to protect investors. Since the Act was amended in 1996, generally only advisers who have at least $25 million of assets under management or advise a registered investment company must register with the Commission. The full text of this Act is available at: http://www.sec.gov/about/laws/iaa40.pdf.

Sarbanes-Oxley Act of 2002
On July 30, 2002, President Bush signed into law the Sarbanes-Oxley Act of 2002, which he characterized as "the most far reaching reforms of American business practices since the time of Franklin Delano Roosevelt." The Act mandated a number of reforms to enhance corporate responsibility, enhance financial disclosures and combat corporate and accounting fraud, and created the "Public Company Accounting Oversight Board," also known as the PCAOB, to oversee the activities of the auditing profession. The full text of the Act is available at:  http://www.sec.gov/about/laws/soa2002.pdf.  You can find links to all Commission rulemaking and reports issued under the Sarbanes-Oxley Act at:  http://www.sec.gov/spotlight/sarbanes-oxley.htm.




http://www.sec.gov/about/whatwedo.shtml

SECURITIES ACT OF 1933：

  Notes to the Reader
1. This document is extracted from Committee Print 108-B of the
Committee on Financial Services of the U.S. House of Representatives,
and was prepared at the direction of that Committee.
2. Any material contained within brackets ø ¿ is not part of the
text of the law but is inserted as an aid to the reader.
3. Citations have been included to enable the reader to locate the
same material in the United States Code (U.S.C.). These citations
are not a part of the text of the law in which they appear. For
changes after the revision date of this excerpt (September 30, 2004)
to provisions of law in this publication that have citations to the
U.S. Code, see the United States Code Classification Tables published
by the Office of the Law Revision Counsel of the House of
Representatives at http://uscode.house.gov/uscct.htm.
REVISED THROUGH SEPTEMBER 30, 2004


INVESTMENT ADVISERS ACT OF 1940
(References in brackets ø ¿ are to title 15, United States Code)
TITLE II—INVESTMENT ADVISERS
FINDINGS
SEC. 201. ø80b–1¿ Upon the basis of facts disclosed by the
record and report of the Securities and Exchange Commission
made pursuant to section 30 of the Public Utility Holding Company
Act of 1935, and facts otherwise disclosed and ascertained, it is
hereby found that investment advisers are of national concern, in
that, among other things—
(1) their advice, counsel, publications, writings, analyses,
and reports are furnished and distributed, and their contracts,
subscription agreements, and other arrangements with clients
are negotiated and performed, by the use of the mails and
means and instrumentalities of interstate commerce;
(2) their advice, counsel, publications, writings, analyses,
and reports customarily relate to the purchase and sale of securities
traded on national securities exchanges and in interstate
over-the-counter markets, securities issued by companies
engaged in business in interstate commerce, and securities
issued by national banks and member banks of the Federal Reserve
System; and
(3) the foregoing transactions occur in such volume as substantially
to affect interstate commerce, national securities exchanges,
and other securities markets, the national banking
system and the national economy.
DEFINITIONS
SEC. 202. ø80b–2¿ (a) When used in this title, unless the context
otherwise requires, the following definitions shall apply:
(1) ‘‘Assignment’’ includes any direct or indirect transfer or
hypothecation of an investment advisory contract by the assignor
or of a controlling block of the assignor’s outstanding
voting securities by a security holder of the assignor; but if the
investment adviser is a partnership, no assignment of an investment
advisory contract shall be deemed to result from the
death or withdrawal of a minority of the members of the investment
adviser having only a minority interest in the business
of the investment adviser, or from the admission to the
investment adviser of one or more members who, after such
admission, shall be only a minority of the members and shall
have only a minority interest in the business.
(2) ‘‘Bank’’ means (A) a banking institution organized
under the laws of the United States, (B) a member bank of the
Federal Reserve System, (C) any other banking institution or

3 SECURITIES ACT OF 1933 Sec. 2
buy’’ as used in subsection (c) of section 5 shall not include preliminary
negotiations or agreements between an issuer (or any
person directly or indirectly controlling or controlled by an
issuer, or under direct or indirect common control with an
issuer) and any underwriter or among underwriters who are or
are to be in privity of contract with an issuer (or any person
directly or indirectly controlling or controlled by an issuer, or
under direct or indirect common control with an issuer). Any
security given or delivered with, or as a bonus on account of,
any purchase of securities or any other thing, shall be conclusively
presumed to constitute a part of the subject of such purchase
and to have been offered and sold for value. The issue
or transfer of a right or privilege, when originally issued or
transferred with a security, giving the holder of such security
the right to convert such security into another security of the
same issuer or of another person, or giving a right to subscribe
to another security of the same issuer or of another person,
which right cannot be exercised until some future date, shall
not be deemed to be an offer or sale of such other security; but
the issue or transfer of such other security upon the exercise
of such right of conversion or subscription shall be deemed a
sale of such other security. Any offer or sale of a security futures
product by or on behalf of the issuer of the securities underlying
the security futures product, an affiliate of the issuer,
or an underwriter, shall constitute a contract for sale of, sale
of, offer for sale, or offer to sell the underlying securities.
(4) The term ‘‘issuer’’ means every person who issues or
proposes to issue any security; except that with respect to certificates
of deposit, voting-trust certificates, or collateral-trust
certificates, or with respect to certificates of interest or shares
in an unincorporated investment trust not having a board of
directors (or persons performing similar functions) or of the
fixed, restricted management, or unit type, the term ‘‘issuer’’
means the person or persons performing the acts and assuming
the duties of depositor or manager pursuant to the provisions
of the trust or other agreement or instrument under which
such securities are issued; except that in the case of an unincorporated
association which provides by its articles for limited
liability of any or all of its members, or in the case of a trust,
committee, or other legal entity, the trustees or members
thereof shall not be individually liable as issuers of any security
issued by the association, trust, committee, or other legal
entity; except that with respect to equipment-trust certificates
or like securities, the term ‘‘issuer’’ means the person by whom
the equipment or property is or is to be used; and except that
with respect to fractional undivided interests in oil, gas, or
other mineral rights, the term ‘‘issuer’’ means the owner of any
such right or of any interest in such right (whether whole or
fractional) who creates fractional interests therein for the
purpose of public offering.
(5) The term ‘‘Commission’’ means the Securities and
Exchange Commission.

Sec. 2 SECURITIES ACT OF 1933 4
1 The words ‘‘Philippine Islands’’ were deleted from the definition of the term ‘‘Territory’’ on
the basis of Presidential Proclamation No. 2695, effective July 4, 1946 (11 F.R. 7517; 60 Stat.
1352), which granted independence to the Philippine Islands.
(6) The term ‘‘Territory’’ means Puerto Rico, the Virgin Islands,
and the insular possessions of the United States. 1
(7) The term ‘‘interstate commerce’’ means trade or commerce
in securities or any transportation or communication relating
thereto among the several States or between the District
of Columbia or any Territory of the United States and any
State or other Territory, or between any foreign country and
any State, Territory, or the District of Columbia, or within the
District of Columbia.
(8) The term ‘‘registration statement’’ means the statement
provided for in section 6, and includes any amendment thereto
and any report, document, or memorandum filed as part of
such statement or incorporated therein by reference.
(9) The term ‘‘write’’ or ‘‘written’’ shall include printed,
lithographed, or any means of graphic communication.
(10) The term ‘‘prospectus’’ means any prospectus, notice,
circular, advertisement, letter, or communication, written or by
radio or television, which offers any security for sale or confirms
the sale of any security; except that (a) a communication
sent or given after the effective date of the registration statement
(other than a prospectus permitted under subsection (b)
of section 10) shall not be deemed a prospectus if it is proved
that prior to or at the same time with such communication a
written prospectus meeting the requirements of subsection (a)
of section 10 at the time of such communication was sent or
given to the person to whom the communication was made,
and (b) a notice, circular, advertisement, letter, or communication
in respect of a security shall not be deemed to be a prospectus
if it states from whom a written prospectus meeting
the requirements of section 10 may be obtained and, in addition,
does no more than identify the security, state the price
thereof, state by whom orders will be executed, and contain
such other information as the Commission, by rules or regulations
deemed necessary or appropriate in the public interest
and for the protection of investors, and subject to such terms
and conditions as may be prescribed therein, may permit.
(11) The term ‘‘underwriter’’ means any person who has
purchased from an issuer with a view to, or offers or sells for
an issuer in connection with, the distribution of any security,
or participates or has a direct or indirect participation in any
such undertaking, or participates or has a participation in the
direct or indirect underwriting of any such undertaking; but
such term shall not include a person whose interest is limited
to a commission from an underwriter or dealer not in excess
of the usual and customary distributors’ or sellers’ commission.
As used in this paragraph the term ‘‘issuer’’ shall include, in
addition to an issuer, any person directly or indirectly controlling
or controlled by the issuer, or any person under direct or
indirect common control with the issuer.
(12) The term ‘‘dealer’’ means any person who engages
either for all or part of his time, directly or indirectly, as agent,

5 SECURITIES ACT OF 1933 Sec. 2
1 29 U.S.C. 1001 et seq. [Printed in appendix to this volume.]
broker, or principal, in the business of offering, buying, selling,
or otherwise dealing or trading in securities issued by another
person.
(13) The term ‘‘insurance company’’ means a company
which is organized as an insurance company, whose primary
and predominant business activity is the writing of insurance
or the reinsuring of risks underwritten by insurance companies,
and which is subject to supervision by the insurance commissioner,
or a similar official or agency, of a State or territory
or the District of Columbia; or any receiver or similar official
or any liquidating agent for such company, in his capacity as
such.
(14) The term ‘‘separate account’’ means an account established
and maintained by an insurance company pursuant to
the laws of any State or territory of the United States, the District
of Columbia, or of Canada or any province thereof, under
which income, gains and losses, whether or not realized, from
assets allocated to such account, are, in accordance with the
applicable contract, credited to or charged against such account
without regard to other income, gains, or losses of the insurance
company.
(15) The term ‘‘accredited investor’’ shall mean—
(i) a bank as defined in section 3(a)(2) whether acting
in its individual or fiduciary capacity; an insurance company
as defined in paragraph (13) of this subsection; an
investment company registered under the Investment
Company Act of 1940 or a business development company
as defined in section 2(a)(48) of that Act; a Small Business
Investment Company licensed by the Small Business
Administration; or an employee benefit plan, including an
individual retirement account, which is subject to the provisions
of the Employee Retirement Income Security Act of
1974,1 if the investment decision is made by a plan fiduciary,
as defined in section 3(21) of such Act, which is
either a bank, insurance company, or registered investment
adviser; or
(ii) any person who, on the basis of such factors as
financial sophistication, net worth, knowledge, and experience
in financial matters, or amount of assets under management
qualifies as an accredited investor under rules
and regulations which the Commission shall prescribe.
(16) The terms ‘‘security future’’, ‘‘narrow-based security
index’’, and ‘‘security futures product’’ have the same meanings
as provided in section 3(a)(55) of the Securities Exchange Act
of 1934.
(b) CONSIDERATION OF PROMOTION OF EFFICIENCY, COMPETITION,
AND CAPITAL FORMATION.—Whenever pursuant to this title
the Commission is engaged in rulemaking and is required to
consider or determine whether an action is necessary or appropriate
in the public interest, the Commission shall also consider, in
addition to the protection of investors, whether the action will promote
efficiency, competition, and capital formation

Sec. 2A SECURITIES ACT OF 1933 6
1 Additional exemptions contained at: 7 U.S.C. 1932(d)(6); 12 U.S.C. 1455, 1717, 1719, 1723c;
15 U.S.C. 77c, note; 20 U.S.C. 1087–2, 1087hh; 22 U.S.C. 283(h), 285h, 286k–1, 290i–9; 43
U.S.C. 1625; and 45 U.S.C. 720. [Printed in appendix to this volume except for 7 U.S.C.
1932(d)(6) and 15 U.S.C. 77c.]
SEC. 2A. ø77b–1¿ SWAP AGREEMENTS.
(a) NON-SECURITY-BASED SWAP AGREEMENTS.—The definition
of ‘‘security’’ in section 2(a)(1) of this title does not include any nonsecurity-
based swap agreement (as defined in section 206C of the
Gramm-Leach-Bliley Act).
(b) SECURITY-BASED SWAP AGREEMENTS.—
(1) The definition of ‘‘security’’ in section 2(a)(1) of this title
does not include any security-based swap agreement (as defined
in section 206B of the Gramm-Leach-Bliley Act).
(2) The Commission is prohibited from registering, or requiring,
recommending, or suggesting, the registration under
this title of any security-based swap agreement (as defined in
section 206B of the Gramm-Leach-Bliley Act). If the Commission
becomes aware that a registrant has filed a registration
statement with respect to such a swap agreement, the Commission
shall promptly so notify the registrant. Any such registration
statement with respect to such a swap agreement
shall be void and of no force or effect.
(3) The Commission is prohibited from—
(A) promulgating, interpreting, or enforcing rules; or
(B) issuing orders of general applicability;
under this title in a manner that imposes or specifies reporting
or recordkeeping requirements, procedures, or standards as
prophylactic measures against fraud, manipulation, or insider
trading with respect to any security-based swap agreement (as
defined in section 206B of the Gramm-Leach-Bliley Act).
(4) References in this title to the ‘‘purchase’’ or ‘‘sale’’ of a
security-based swap agreement shall be deemed to mean the
execution, termination (prior to its scheduled maturity date),
assignment, exchange, or similar transfer or conveyance of, or
extinguishing of rights or obligations under, a security-based
swap agreement (as defined in section 206B of the Gramm-
Leach-Bliley Act), as the context may require.
EXEMPTED SECURITIES 1
SEC. 3. ø77c¿ (a) Except as hereinafter expressly provided, the
provisions of this title shall not apply to any of the following
classes of securities:
(1) Reserved.
(2) Any security issued or guaranteed by the United States
or any Territory thereof, or by the District of Columbia, or by
any State of the United States, or by any political subdivision
of a State or Territory, or by any public instrumentality of one
or more States or Territories, or by any person controlled or
supervised by and acting as an instrumentality of the Government
of the United States pursuant to authority granted by
the Congress of the United States; or any certificate of deposit
for any of the foregoing; or any security issued or guaranteed
by any bank; or any security issued by or representing an interest
in or a direct obligation of a Federal Reserve bank; or

7 SECURITIES ACT OF 1933 Sec. 3
1 Section 103(c) of the Internal Revenue Code of 1954 redesignated as section 103(b) by section
1901(a)(17) of Pub. L. 94–455 (26 U.S.C. 103(b)). [Printed in appendix to this volume.]
2 Paragraph (7) redesignated as paragraph (13) (26 U.S.C. 103(b)(13)). [Printed in appendix
to this volume.]
3 26 U.S.C. 401. [Printed in appendix to this volume.]
4 26 U.S.C. 404(a)(2). [Printed in appendix to this volume.]
5 26 U.S.C. 414(d). [Printed in appendix to this volume.]
6 26 U.S.C. 403(b). [Printed in appendix to this volume.]
any interest or participation in any common trust fund or similar
fund that is excluded from the definition of the term
‘‘investment company’’ under section 3(c)(3) of the Investment
Company Act of 1940; or any security which is an industrial
development bond (as defined in section 103(c)(2) of the Internal
Revenue Code of 1954) 1 the interest on which is excludable
from gross income under section 103(a)(1) of such Code if, by
reason of the application of paragraph (4) or (6) of section
103(c) of such Code (determined as if paragraphs (4)(A), (5),
and (7) 2 were not included in such section 103(c)), paragraph
(1) of such section 103(c) does not apply to such security; or
any interest or participation in a single trust fund, or in a collective
trust fund maintained by a bank, or any security arising
out of a contract issued by an insurance company, which
interest, participation, or security is issued in connection with
(A) a stock bonus, pension, or profit-sharing plan which meets
the requirements for qualification under section 401 of the Internal
Revenue Code of 1954,3 (B) an annuity plan which
meets the requirements for the deduction of the employer’s
contributions under section 404(a)(2) of such Code,4 or (C) a
governmental plan as defined in section 414(d) of such Code 5
which has been established by an employer for the exclusive
benefit of its employees or their beneficiaries for the purpose
of distributing to such employees or their beneficiaries the corpus
and income of the funds accumulated under such plan, if
under such plan it is impossible, prior to the satisfaction of all
liabilities with respect to such employees and their beneficiaries,
for any part of the corpus or income to be used for,
or diverted to, purposes other than the exclusive benefit of
such employees or their beneficiaries, other than any plan described
in clause (A), (B), or (C) of this paragraph (i) the contributions
under which are held in a single trust fund or in a
separate account maintained by an insurance company for a
single employer and under which an amount in excess of the
employer’s contribution is allocated to the purchase of securities
(other than interests or participations in the trust or separate
account itself) issued by the employer or any company directly
or indirectly controlling, controlled by, or under common
control with the employer, (ii) which covers employees some or
all of whom are employees within the meaning of section
401(c)(1) of such Code, or (iii) which is a plan funded by an annuity
contract described in section 403(b) 6 of such Code. The
Commission, by rules and regulations or order, shall exempt
from the provisions of section 5 of this title any interest or participation
issued in connection with a stock bonus, pension,
profit-sharing, or annuity plan which covers employees some or
all of whom are employees within the meaning of section


Sec. 3 SECURITIES ACT OF 1933 8
1 26 U.S.C. 521. [Printed in appendix to this volume.]
2 26 U.S.C. 501(c)(16). [Printed in appendix to this volume.]
401(c)(1) of the Internal Revenue Code of 1954, if and to the
extent that the Commission determines this to be necessary or
appropriate in the public interest and consistent with the protection
of investors and the purposes fairly intended by the policy
and provisions of this title. For purposes of this paragraph,
a security issued or guaranteed by a bank shall not include
any interest or participation in any collective trust fund maintained
by a bank; and the term ‘‘bank’’ means any national
bank, or any banking institution organized under the laws of
any State, territory, or the District of Columbia, the business
of which is substantially confined to banking and is supervised
by the State or territorial banking commission or similar official;
except that in the case of a common trust fund or similar
fund, or a collective trust fund, the term ‘‘bank’’ has the same
meaning as in the Investment Company Act of 1940;
(3) Any note, draft, bill of exchange, or banker’s acceptance
which arises out of a current transaction or the proceeds of
which have been or are to be used for current transactions, and
which has a maturity at the time of issuance of not exceeding
nine months, exclusive of days of grace, or any renewal thereof
the maturity of which is likewise limited;
(4) Any security issued by a person organized and operated
exclusively for religious, educational, benevolent, fraternal,
charitable, or reformatory purposes and not for pecuniary
profit, and no part of the net earnings of which inures to the
benefit of any person, private stockholder, or individual; or any
security of a fund that is excluded from the definition of an
investment company under section 3(c)(10)(B) of the Investment
Company Act of 1940;
(5) Any security issued (A) by a savings and loan association,
building and loan association, cooperative bank, homestead
association, or similar institution, which is supervised
and examined by State or Federal authority having supervision
over any such institution; or (B) by (i) a farmer’s cooperative
organization exempt from tax under section 521 of the Internal
Revenue Code of 1954,1 (ii) a corporation described in section
501(c)(16) of such Code 2 and exempt from tax under section
501(a) of such Code, or (iii) a corporation described in section
501(c)(2) of such Code which is exempt from tax under section
501(a) of such Code and is organized for the exclusive purpose
of holding title to property, collecting income therefrom, and
turning over the entire amount thereof, less expenses, to an
organization or corporation described in clause (i) or (ii);
(6) Any interest in a railroad equipment trust. For purposes
of this paragraph ‘‘interest in a railroad equipment trust’’
means any interest in an equipment trust, lease, conditional
sales contract, or other similar arrangement entered into,
issued, assumed, guaranteed by, or for the benefit of, a common
carrier to finance the acquisition of rolling stock, including
motive power;

9 SECURITIES ACT OF 1933 Sec. 3
1 But see section 24(d) of the Investment Company Act of 1940, infra.
(7) Certificates issued by a receiver or by a trustee in
bankruptcy, with the approval of the court;
(8) Any insurance or endowment policy or annuity contract
or optional annuity contract, issued by a corporation subject to
the supervision of the insurance commissioner, bank commissioner,
or any agency or officer performing like functions, of
any State or Territory of the United States or the District of
Columbia;1
(9) Except with respect to a security exchanged in a case
under title 11, any security exchanged by the issuer with its
existing security holders exclusively where no commission or
other remuneration is paid or given directly or indirectly for
soliciting such exchange;
(10) Except with respect to a security exchanged in a case
under title 11, any security which is issued in exchange for one
or more bona fide outstanding securities, claims or property interests,
or partly in such exchange and partly for cash, where
the terms and conditions of such issuance and exchange are
approved, after a hearing upon the fairness of such terms and
conditions at which all persons to whom it is proposed to issue
securities in such exchange shall have the right to appear, by
any court, or by any official or agency of the United States, or
by any State or Territorial banking or insurance commission or
other governmental authority expressly authorized by law to
grant such approval;
(11) Any security which is a part of an issue offered and
sold only to persons resident within a single State or Territory,
where the issuer of such security is a person resident and
doing business within or, if a corporation, incorporated by and
doing business within, such State or Territory.
(12) Any equity security issued in connection with the acquisition
by a holding company of a bank under section 3(a) of
the Bank Holding Company Act of 1956 or a savings association
under section 10(e) of the Home Owners’ Loan Act, if—
(A) the acquisition occurs solely as part of a reorganization
in which security holders exchange their shares of
a bank or savings association for shares of a newly formed
holding company with no significant assets other than
securities of the bank or savings association and the existing
subsidiaries of the bank or savings association;
(B) the security holders receive, after that reorganization,
substantially the same proportional share interests in
the holding company as they held in the bank or savings
association, except for nominal changes in shareholders’
interests resulting from lawful elimination of fractional interests
and the exercise of dissenting shareholders’ rights
under State or Federal law;
(C) the rights and interests of security holders in the
holding company are substantially the same as those in
the bank or savings association prior to the transaction,
other than as may be required by law; and

Sec. 4 SECURITIES ACT OF 1933 10
1 15 U.S.C. 661 et seq.
2 See additional exemption contained at 11 U.S.C. 1145. [Printed in appendix to this volume.]
(D) the holding company has substantially the same
assets and liabilities, on a consolidated basis, as the bank
or savings association had prior to the transaction.
For purposes of this paragraph, the term ‘‘savings association’’
means a savings association (as defined in section 3(b) of the
Federal Deposit Insurance Act) the deposits of which are insured
by the Federal Deposit Insurance Corporation.
(13) Any security issued by or any interest or participation
in any church plan, company or account that is excluded from
the definition of an investment company under section 3(c)(14)
of the Investment Company Act of 1940.
(14) Any security futures product that is—
(A) cleared by a clearing agency registered under section
17A of the Securities Exchange Act of 1934 or exempt
from registration under subsection (b)(7) of such section
17A; and
(B) traded on a national securities exchange or a national
securities association registered pursuant to section
15A(a) of the Securities Exchange Act of 1934.
(b) The Commission may from time to time by its rules and
regulations, and subject to such terms and conditions as may be
prescribed therein, add any class of securities to the securities
exempted as provided in this section, if it finds that the enforcement
of this title with respect to such securities is not necessary
in the public interest and for the protection of investors by reason
of the small amount involved or the limited character of the public
offering; but no issue of securities shall be exempted under this
subsection where the aggregate amount at which such issue is offered
to the public exceeds $5,000,000.
(c) The Commission may from time to time by its rules and
regulations and subject to such terms and conditions as may be
prescribed therein, add to the securities exempted as provided in
this section any class of securities issued by a small business
investment company under the Small Business Investment Act of
1958 1 if it finds, having regard to the purposes of that Act, that
the enforcement of this Act with respect to such securities is not
necessary in the public interest and for the protection of investors.
EXEMPTED TRANSACTIONS 2
SEC. 4. ø77d¿ The provisions of section 5 shall not apply to—
(1) transactions by any person other than an issuer, underwriter,
or dealer.
(2) transactions by an issuer not involving any public offering.
(3) transactions by a dealer (including an underwriter no
longer acting as an underwriter in respect of the security involved
in such transaction), except—
(A) transactions taking place prior to the expiration of
forty days after the first date upon which the security was
bona fide offered to the public by the issuer or by or
through an underwriter,

11 SECURITIES ACT OF 1933 Sec. 4
1 12 U.S.C. 1709, 1715b.
(B) transactions in a security as to which a registration
statement has been filed taking place prior to the
expiration of forty days after the effective date of such registration
statement or prior to the expiration of forty days
after the first date upon which the security was bona fide
offered to the public by the issuer or by or through an
underwriter after such effective date, whichever is later
(excluding in the computation of such forty days any time
during which a stop order issued under section 8 is in effect
as to the security), or such shorter period as the Commission
may specify by rules and regulations or order, and
(C) transactions as to securities constituting the whole
or a part of an unsold allotment to or subscription by such
dealer as a participant in the distribution of such securities
by the issuer or by or through an underwriter.
With respect to transactions referred to in clause (B), if securities
of the issuer have not previously been sold pursuant to an
earlier effective registration statement the applicable period,
instead of forty days, shall be ninety days, or such shorter period
as the Commission may specify by rules and regulations
or order.
(4) brokers’ transactions executed upon customers’ orders
on any exchange or in the over-the-counter market but not the
solicitation of such orders.
(5)(A) Transactions involving offers or sales of one or more
promissory notes directly secured by a first lien on a single
parcel of real estate upon which is located a dwelling or other
residential or commercial structure, and participation interests
in such notes—
(i) where such securities are originated by a savings
and loan association, savings bank, commercial bank, or
similar banking institution which is supervised and examined
by a Federal or State authority, and are offered and
sold subject to the following conditions:
(a) the minimum aggregate sales price per purchaser
shall not be less than $250,000;
(b) the purchaser shall pay cash either at the time
of the sale or within sixty days thereof; and
(c) each purchaser shall buy for his own account
only; or
(ii) where such securities are originated by a mortgagee
approved by the Secretary of Housing and Urban
Development pursuant to sections 203 and 211 1 of the National
Housing Act and are offered or sold subject to the
three conditions specified in subparagraph (A)(i) to any
institution described in such subparagraph or to any insurance
company subject to the supervision of the insurance
commissioner, or any agency or officer performing like
function, of any State or territory of the United States or
the District of Columbia, or the Federal Home Loan Mort

Sec. 5 SECURITIES ACT OF 1933 12
gage Corporation, the Federal National Mortgage Association,
or the Government National Mortgage Association.
(B) Transactions between any of the entities described in
subparagraph (A)(i) or (A)(ii) hereof involving non-assignable
contracts to buy or sell the foregoing securities which are to be
completed within two years, where the seller of the foregoing
securities pursuant to any such contract is one of the parties
described in subparagraph (A)(i) or (A)(ii) who may originate
such securities and the purchaser of such securities pursuant
to any such contract is any institution described in subparagraph
(A)(i) or any insurance company described in subparagraph
(A)(ii), the Federal Home Loan Mortgage Corporation,
Federal National Mortgage Association, or the Government National
Mortgage Association and where the foregoing securities
are subject to the three conditions for sale set forth in subparagraphs
(A)(i) (a) through (c).
(C) The exemption provided by subparagraphs (A) and (B)
hereof shall not apply to resales of the securities acquired pursuant
thereto, unless each of the conditions for sale contained
in subparagraphs (A)(1) (a) through (c) are satisfied.
(6) transactions involving offers or sales by an issuer solely
to one or more accredited investors, if the aggregate offering
price of an issue of securities offered in reliance on this paragraph
does not exceed the amount allowed under section 3(b)
of this title, if there is no advertising or public solicitation in
connection with the transaction by the issuer or anyone acting
on the issuer’s behalf, and if the issuer files such notice with
the Commission as the Commission shall prescribe.
PROHIBITIONS RELATING TO INTERSTATE COMMERCE AND THE MAILS
SEC. 5. ø77e¿ (a) Unless a registration statement is in effect
as to a security, it shall be unlawful for any person, directly or
indirectly—
(1) to make use of any means or instruments of transportation
or communication in interstate commerce or of the mails
to sell such security through the use or medium of any prospectus
or otherwise; or
(2) to carry or cause to be carried through the mails or in
interstate commerce, by any means or instruments of transportation,
any such security for the purpose of sale or for delivery
after sale.
(b) It shall be unlawful for any person, directly or indirectly—
(1) to make use of any means or instruments of transportation
or communication in interstate commerce or of the mails
to carry or transmit any prospectus relating to any security
with respect to which a registration statement has been filed
under this title, unless such prospectus meets the requirements
of section 10; or
(2) to carry or cause to be carried through the mails or in
interstate commerce any such security for the purpose of sale
or for delivery after sale, unless accompanied or preceded by a
prospectus that meets the

13 SECURITIES ACT OF 1933 Sec. 6
1 But see sections 24(e) and 24(f) of the Investment Company Act of 1940, infra.
(c) It shall be unlawful for any person, directly or indirectly,
to make use of any means or instruments of transportation or communication
in interstate commerce or of the mails to offer to sell
or offer to buy through the use or medium of any prospectus or otherwise
any security, unless a registration statement has been filed
as to such security, or while the registration statement is the subject
of a refusal order or stop order or (prior to the effective date
of the registration statement) any public proceeding or examination
under section 8.
REGISTRATION OF SECURITIES AND SIGNING OF REGISTRATION
STATEMENT
SEC. 6. ø77f¿ (a) Any security may be registered with the Commission
under the terms and conditions hereinafter provided, by filing
a registration statement in triplicate, at least one of which
shall be signed by each issuer, its principal executive officer or officers,
its principal financial officer, its comptroller or principal accounting
officer, and the majority of its board of directors or persons
performing similar functions (or, if there is no board of directors
or persons performing similar functions, by the majority of the
persons or board having the power of management of the issuer),
and in case the issuer is a foreign or Territorial person by its duly
authorized representative in the United States; except that when
such registration statement relates to a security issued by a foreign
government, or political subdivision thereof, it need be signed only
by the underwriter of such security. Signatures of all such persons
when written on the said registration statements shall be presumed
to have been so written by authority of the person whose
signature is so affixed and the burden of proof, in the event such
authority shall be denied, shall be upon the party denying the
same. The affixing of any signature without the authority of the
purported signer shall constitute a violation of this title. A registration
statement shall be deemed effective only as to the securities
specified therein as proposed to be offered.
(b) REGISTRATION FEE.—
(1) RECOVERY OF COST OF SERVICES.—The Commission
shall, in accordance with this subsection, 1 collect registration
fees that are designed to recover the costs to the government
of the securities registration process, and costs related to such
process, including enforcement activities, policy and rulemaking
activities, administration, legal services, and international
regulatory activities.
(2) FEE PAYMENT REQUIRED.—At the time of filing a registration
statement, the applicant shall pay to the Commission
a fee at a rate that shall be equal to $92 per $1,000,000 of the
maximum aggregate price at which such securities are proposed
to be offered, except that during fiscal year 2003 and any
succeeding fiscal year such fee shall be adjusted pursuant to
paragraph (5) or (6).
(3) OFFSETTING COLLECTIONS.—Fees collected pursuant to
this subsection for any fiscal year—


Sec. 6 SECURITIES ACT OF 1933 14
(A) shall be deposited and credited as offsetting collections
to the account providing appropriations to the Commission;
and
(B) except as provided in paragraph (9), shall not be
collected for any fiscal year except to the extent provided
in advance in appropriation Acts.
(4) GENERAL REVENUES PROHIBITED.—No fees collected
pursuant to this subsection for fiscal year 2002 or any succeeding
fiscal year shall be deposited and credited as general
revenue of the Treasury.
(5) ANNUAL ADJUSTMENT.—For each of the fiscal years
2003 through 2011, the Commission shall by order adjust the
rate required by paragraph (2) for such fiscal year to a rate
that, when applied to the baseline estimate of the aggregate
maximum offering prices for such fiscal year, is reasonably
likely to produce aggregate fee collections under this subsection
that are equal to the target offsetting collection amount
for such fiscal year.
(6) FINAL RATE ADJUSTMENT.—For fiscal year 2012 and all
of the succeeding fiscal years, the Commission shall by order
adjust the rate required by paragraph (2) for all of such fiscal
years to a rate that, when applied to the baseline estimate of
the aggregate maximum offering prices for fiscal year 2012, is
reasonably likely to produce aggregate fee collections under
this subsection in fiscal year 2012 equal to the target offsetting
collection amount for fiscal year 2011.
(7) PRO RATA APPLICATION.—The rates per $1,000,000 required
by this subsection shall be applied pro rata to amounts
and balances of less than $1,000,000.
(8) REVIEW AND EFFECTIVE DATE.—In exercising its authority
under this subsection, the Commission shall not be required
to comply with the provisions of section 553 of title 5, United
States Code. An adjusted rate prescribed under paragraph (5)
or (6) and published under paragraph (10) shall not be subject
to judicial review. Subject to paragraphs (3)(B) and (9)—
(A) an adjusted rate prescribed under paragraph (5)
shall take effect on the later of—
(i) the first day of the fiscal year to which such
rate applies; or
(ii) five days after the date on which a regular
appropriation to the Commission for such fiscal year is
enacted; and
(B) an adjusted rate prescribed under paragraph (6)
shall take effect on the later of—
(i) the first day of fiscal year 2012; or
(ii) five days after the date on which a regular
appropriation to the Commission for fiscal year 2012
is enacted.
(9) LAPSE OF APPROPRIATION.—If on the first day of a fiscal
year a regular appropriation to the Commission has not been
enacted, the Commission shall continue to collect fees (as offsetting
collections) under this subsection at the rate in effect
during the preceding fiscal year, until 5 days after the date
such a regular appropriation is enacted.

15 SECURITIES ACT OF 1933 Sec. 7
1 But see sections 24(e) and 24(f) of the Investment Company Act of 1940, infra.
2 For additional information required of certain public utilities, see 16 U.S.C. 824c(h).
(10) PUBLICATION.—The Commission shall publish in the
Federal Register notices of the rate applicable under this subsection
and under sections 13(e) and 14(g) for each fiscal year
not later than April 30 of the fiscal year preceding the fiscal
year to which such rate applies, together with any estimates
or projections on which such rate is based.
(11) DEFINITIONS.—For purposes of this subsection:
(A) TARGET OFFSETTING COLLECTION AMOUNT.—The
target offsetting collection amount for each of the fiscal
years 2002 through 2011 is determined according to the
following table:
Target offsetting
Fiscal year: collection amount
2002 ................................................................................... $377,000,000
2003 ................................................................................... $435,000,000
2004 ................................................................................... $467,000,000
2005 ................................................................................... $570,000,000
2006 ................................................................................... $689,000,000
2007 ................................................................................... $214,000,000
2008 ................................................................................... $234,000,000
2009 ................................................................................... $284,000,000
2010 ................................................................................... $334,000,000
2011 ................................................................................... $394,000,000
(B) BASELINE ESTIMATE OF THE AGGREGATE MAXIMUM
OFFERING PRICES.—The baseline estimate of the aggregate
maximum offering prices for any fiscal year is the baseline
estimate of the aggregate maximum offering price at which
securities are proposed to be offered pursuant to registration
statements filed with the Commission during such fiscal
year as determined by the Commission, after consultation
with the Congressional Budget Office and the Office
of Management and Budget, using the methodology required
for projections pursuant to section 257 of the Balanced
Budget and Emergency Deficit Control Act of 1985.
(c) The filing with the Commission of a registration statement,
or of an amendment to a registration statement, shall be deemed
to have taken place upon the receipt thereof, but the filing of a registration
statement shall not be deemed to have taken place unless
it is accompanied by a United States postal money order or a certified
bank check or cash for the amount of the fee required under
subsection (b).
(d) The information contained in or filed with any registration
statement shall be made available to the public under such regulations
as the Commission may prescribe, and copies thereof, photostatic
or otherwise, shall be furnished to every applicant at such
reasonable charge as the Commission may prescribe.
INFORMATION REQUIRED IN REGISTRATION STATEMENT 1
SEC. 7. 2 ø77g¿ (a) The registration statement, when relating to
a security other than a security issued by a foreign government, or
political subdivision thereof, shall contain the information, and be
accompanied by the documents, specified in Schedule A, and when

Sec. 7 SECURITIES ACT OF 1933 16
relating to a security issued by a foreign government, or political
subdivision thereof, shall contain the information, and be accompanied
by the documents, specified in Schedule B; except that the
Commission may by rules or regulations provide that any such information
or document need not be included in respect of any class
of issuers or securities if it finds that the requirement of such information
or document is inapplicable to such class and that disclosure
fully adequate for the protection of investors is otherwise required
to be included within the registration statement. If any accountant,
engineer, or appraiser, or any person whose profession
gives authority to a statement made by him, is named as having
prepared or certified any part of the registration statement, or is
named as having prepared or certified a report or valuation for use
in connection with the registration statement, the written consent
of such person shall be filed with the registration statement. If any
such person is named as having prepared or certified a report or
valuation (other than a public official document or statement)
which is used in connection with the registration statement, but is
not named as having prepared or certified such report or valuation
for use in connection with the registration statement, the written
consent of such person shall be filed with the registration statement
unless the Commission dispenses with such filing as impracticable
or as involving undue hardship on the person filing the registration
statement. Any such registration statement shall contain
such other information, and be accompanied by such other documents,
as the Commission may by rules or regulations require as
being necessary or appropriate in the public interest or for the protection
of investors.
(b)(1) The Commission shall prescribe special rules with respect
to registration statements filed by any issuer that is a blank
check company. Such rules may, as the Commission determines
necessary or appropriate in the public interest or for the protection
of investors—
(A) require such issuers to provide timely disclosure, prior
to or after such statement becomes effective under section 8,
of (i) information regarding the company to be acquired and
the specific application of the proceeds of the offering, or (ii)
additional information necessary to prevent such statement
from being misleading;
(B) place limitations on the use of such proceeds and the
distribution of securities by such issuer until the disclosures
required under subparagraph (A) have been made; and
(C) provide a right of rescission to shareholders of such
securities.
(2) The Commission may, as it determines consistent with the
public interest and the protection of investors, by rule or order
exempt any issuer or class of issuers from the rules prescribed
under paragraph (1).
(3) For purposes of paragraph (1) of this subsection, the term
‘‘blank check company’’ means any development stage company
that is issuing a penny stock (within the meaning of section
3(a)(51) of the Securities Exchange Act of 1934) and that—
(A) has no specific business plan or purpose; or

17 SECURITIES ACT OF 1933 Sec. 8
1 See also section 14(a) of the Investment Company Act of 1940, infra.
(B) has indicated that its business plan is to merge with
an unidentified company or companies.
TAKING EFFECT OF REGISTRATION STATEMENTS AND AMENDMENTS
THERETO
SEC. 8. ø77h¿ (a) Except as hereinafter provided, the effective
date of a registration statement shall be the twentieth day after
the filing thereof or such earlier date as the Commission may
determine, having due regard to the adequacy of the information
respecting the issuer theretofore available to the public, to the facility
with which the nature of the securities to be registered, their
relationship to the capital structure of the issuer and the rights of
holders thereof can be understood, and to the public interest and
the protection of investors. If any amendment to any such statement
is filed prior to the effective date of such statement, the registration
statement shall be deemed to have been filed when such
amendment was filed; except that an amendment filed with the
consent of the Commission, prior to the effective date of the registration
statement, or filed pursuant to an order of the Commission,
shall be treated as a part of the registration statement.
(b) If it appears to the Commission that a registration statement
is on its face incomplete or inaccurate in any material respect,
the Commission may, after notice by personal service or the
sending of confirmed telegraphic notice not later than ten days
after the filing of the registration statement, and opportunity for
hearing (at a time fixed by the Commission) within ten days after
such notice by personal service or the sending of such telegraphic
notice, issue an order prior to the effective date of registration refusing
to permit such statement to become effective until it has
been amended in accordance with such order. When such statement
has been amended in accordance with such order the Commission
shall so declare and the registration shall become effective
at the time provided in subsection (a) or upon the date of such declaration,
whichever date is the later.
(c) An amendment filed after the effective date of the registration
statement, if such amendment, upon its face, appears to the
Commission not to be incomplete or inaccurate in any material respect,
shall become effective on such date as the Commission may
determine, having due regard to the public interest and the protection
of investors.
(d) If it appears to the Commission at any time that the registration
statement includes any untrue statement of a material
fact or omits to state any material fact required to be stated
therein or necessary to make the statements therein not misleading,
the Commission may, after notice by personal service or
the sending of confirmed telegraphic notice, and after opportunity
for hearing (at a time fixed by the Commission) within fifteen days
after such notice by personal service or the sending of such telegraphic
notice, issue a stop order suspending the effectiveness of
the registration statement.1 When such statement has been

Sec. 8A SECURITIES ACT OF 1933 18
amended in accordance with such stop order the Commission shall
so declare and thereupon the stop order shall cease to be effective.
(e) The Commission is hereby empowered to make an examination
in any case in order to determine whether a stop order should
issue under subsection (d). In making such examination the Commission
or any officer or officers designated by it shall have access
to and may demand the production of any books and papers of, and
may administer oaths and affirmations to and examine, the issuer,
underwriter, or any other person, in respect of any matter relevant
to the examination, and may, in its discretion, require the production
of a balance sheet exhibiting the assets and liabilities of the
issuer, or its income statement, or both, to be certified to by a public
or certified accountant approved by the Commission. If the
issuer or underwriter shall fail to cooperate, or shall obstruct or
refuse to permit the making of an examination, such conduct shall
be proper ground for the issuance of a stop order.
(f) Any notice required under this section shall be sent to or
served on the issuer, or, in case of a foreign government or political
subdivision thereof, to or on the underwriter, or, in the case of a
foreign or Territorial person, to or on its duly authorized representative
in the United States named in the registration statement,
properly directed in each case of telegraphic notice to the address
given in such statement.
CEASE-AND-DESIST PROCEEDINGS
SEC. 8A. ø77h–1¿ (a) AUTHORITY OF THE COMMISSION.—If the
Commission finds, after notice and opportunity for hearing, that
any person is violating, has violated, or is about to violate any provision
of this title, or any rule or regulation thereunder, the Commission
may publish its findings and enter an order requiring such
person, and any other person that is, was, or would be a cause of
the violation, due to an act or omission the person knew or should
have known would contribute to such violation, to cease and desist
from committing or causing such violation and any future violation
of the same provision, rule, or regulation. Such order may, in addition
to requiring a person to cease and desist from committing or
causing a violation, require such person to comply, or to take steps
to effect compliance, with such provision, rule, or regulation, upon
such terms and conditions and within such time as the Commission
may specify in such order. Any such order may, as the Commission
deems appropriate, require future compliance or steps to effect future
compliance, either permanently or for such period of time as
the Commission may specify, with such provision, rule, or regulation
with respect to any security, any issuer, or any other person.
(b) HEARING.—The notice instituting proceedings pursuant to
subsection (a) shall fix a hearing date not earlier than 30 days nor
later than 60 days after service of the notice unless an earlier or
a later date is set by the Commission with the consent of any
respondent so served.
(c) TEMPORARY ORDER.—
(1) IN GENERAL.—Whenever the Commission determines
that the alleged violation or threatened violation specified in
the notice instituting proceedings pursuant to subsection (a), or
the continuation thereof, is likely to result in significant dis

Sec. 8A SECURITIES ACT OF 1933 18
amended in accordance with such stop order the Commission shall
so declare and thereupon the stop order shall cease to be effective.
(e) The Commission is hereby empowered to make an examination
in any case in order to determine whether a stop order should
issue under subsection (d). In making such examination the Commission
or any officer or officers designated by it shall have access
to and may demand the production of any books and papers of, and
may administer oaths and affirmations to and examine, the issuer,
underwriter, or any other person, in respect of any matter relevant
to the examination, and may, in its discretion, require the production
of a balance sheet exhibiting the assets and liabilities of the
issuer, or its income statement, or both, to be certified to by a public
or certified accountant approved by the Commission. If the
issuer or underwriter shall fail to cooperate, or shall obstruct or
refuse to permit the making of an examination, such conduct shall
be proper ground for the issuance of a stop order.
(f) Any notice required under this section shall be sent to or
served on the issuer, or, in case of a foreign government or political
subdivision thereof, to or on the underwriter, or, in the case of a
foreign or Territorial person, to or on its duly authorized representative
in the United States named in the registration statement,
properly directed in each case of telegraphic notice to the address
given in such statement.
CEASE-AND-DESIST PROCEEDINGS
SEC. 8A. ø77h–1¿ (a) AUTHORITY OF THE COMMISSION.—If the
Commission finds, after notice and opportunity for hearing, that
any person is violating, has violated, or is about to violate any provision
of this title, or any rule or regulation thereunder, the Commission
may publish its findings and enter an order requiring such
person, and any other person that is, was, or would be a cause of
the violation, due to an act or omission the person knew or should
have known would contribute to such violation, to cease and desist
from committing or causing such violation and any future violation
of the same provision, rule, or regulation. Such order may, in addition
to requiring a person to cease and desist from committing or
causing a violation, require such person to comply, or to take steps
to effect compliance, with such provision, rule, or regulation, upon
such terms and conditions and within such time as the Commission
may specify in such order. Any such order may, as the Commission
deems appropriate, require future compliance or steps to effect future
compliance, either permanently or for such period of time as
the Commission may specify, with such provision, rule, or regulation
with respect to any security, any issuer, or any other person.
(b) HEARING.—The notice instituting proceedings pursuant to
subsection (a) shall fix a hearing date not earlier than 30 days nor
later than 60 days after service of the notice unless an earlier or
a later date is set by the Commission with the consent of any
respondent so served.
(c) TEMPORARY ORDER.—
(1) IN GENERAL.—Whenever the Commission determines
that the alleged violation or threatened violation specified in
the notice instituting proceedings pursuant to subsection (a), or
the continuation thereof, is likely to result in significant dis

19 SECURITIES ACT OF 1933 Sec. 8A
sipation or conversion of assets, significant harm to investors,
or substantial harm to the public interest, including, but not
limited to, losses to the Securities Investor Protection Corporation,
prior to the completion of the proceedings, the Commission
may enter a temporary order requiring the respondent to
cease and desist from the violation or threatened violation and
to take such action to prevent the violation or threatened violation
and to prevent dissipation or conversion of assets, significant
harm to investors, or substantial harm to the public interest
as the Commission deems appropriate pending completion
of such proceeding. Such an order shall be entered only after
notice and opportunity for a hearing, unless the Commission
determines that notice and hearing prior to entry would be
impracticable or contrary to the public interest. A temporary
order shall become effective upon service upon the respondent
and, unless set aside, limited, or suspended by the Commission
or a court of competent jurisdiction, shall remain effective and
enforceable pending the completion of the proceedings.
(2) APPLICABILITY.—This subsection shall apply only to a
respondent that acts, or, at the time of the alleged misconduct
acted, as a broker, dealer, investment adviser, investment company,
municipal securities dealer, government securities
broker, government securities dealer, or transfer agent, or is,
or was at the time of the alleged misconduct, an associated
person of, or a person seeking to become associated with, any
of the foregoing.
(d) REVIEW OF TEMPORARY ORDERS.—
(1) COMMISSION REVIEW.—At any time after the respondent
has been served with a temporary cease-and-desist order
pursuant to subsection (c), the respondent may apply to the
Commission to have the order set aside, limited, or suspended.
If the respondent has been served with a temporary cease-anddesist
order entered without a prior Commission hearing, the
respondent may, within 10 days after the date on which the
order was served, request a hearing on such application and
the Commission shall hold a hearing and render a decision on
such application at the earliest possible time.
(2) JUDICIAL REVIEW.—Within—
(A) 10 days after the date the respondent was served
with a temporary cease-and-desist order entered with a
prior Commission hearing, or
(B) 10 days after the Commission renders a decision
on an application and hearing under paragraph (1), with
respect to any temporary cease-and-desist order entered
without a prior Commission hearing,
the respondent may apply to the United States district court
for the district in which the respondent resides or has its principal
place of business, or for the District of Columbia, for an
order setting aside, limiting, or suspending the effectiveness or
enforcement of the order, and the court shall have jurisdiction
to enter such an order. A respondent served with a temporary
cease-and-desist order entered without a prior Commission
hearing may not apply to the court except after hearing and


Sec. 9 SECURITIES ACT OF 1933 20
decision by the Commission on the respondent’s application
under paragraph (1) of this subsection.
(3) NO AUTOMATIC STAY OF TEMPORARY ORDER.—The commencement
of proceedings under paragraph (2) of this subsection
shall not, unless specifically ordered by the court, operate
as a stay of the Commission’s order.
(4) EXCLUSIVE REVIEW.—Section 9(a) of this title shall not
apply to a temporary order entered pursuant to this section.
(e) AUTHORITY TO ENTER AN ORDER REQUIRING AN ACCOUNTING
AND DISGORGEMENT.—In any cease-and-desist proceeding
under subsection (a), the Commission may enter an order requiring
accounting and disgorgement, including reasonable interest. The
Commission is authorized to adopt rules, regulations, and orders
concerning payments to investors, rates of interest, periods of accrual,
and such other matters as it deems appropriate to implement
this subsection.
(f) AUTHORITY OF THE COMMISSION TO PROHIBIT PERSONS FROM
SERVING AS OFFICERS OR DIRECTORS.—In any cease-and-desist proceeding
under subsection (a), the Commission may issue an order
to prohibit, conditionally or unconditionally, and permanently or
for such period of time as it shall determine, any person who has
violated section 17(a)(1) or the rules or regulations thereunder,
from acting as an officer or director of any issuer that has a class
of securities registered pursuant to section 12 of the Securities Exchange
Act of 1934, or that is required to file reports pursuant to
section 15(d) of that Act, if the conduct of that person demonstrates
unfitness to serve as an officer or director of any such issuer.
COURT REVIEW OF ORDERS
SEC. 9. ø77i¿ (a) Any person aggrieved by an order of the Commission
may obtain a review of such order in the court of appeals
of the United States, within any circuit wherein such person resides
or has his principal place of business, or in the United States
Court of Appeals for the District of Columbia, by filing in such
Court; within sixty days after the entry of such order, a written
petition praying that the order of the Commission be modified or
be set aside in whole or in part. A copy of such petition shall be
forthwith transmitted by the clerk of the court to the Commission,
and thereupon the Commission shall file in the court the record
upon which the order complained of was entered, as provided in
section 2112 of title 28, United States Code. No objection to the
order of the Commission shall be considered by the court unless
such objection shall have been urged before the Commission. The
finding of the Commission as to the facts, if supported by evidence,
shall be conclusive. If either party shall apply to the court for leave
to adduce additional evidence, and shall show to the satisfaction of
the court that such additional evidence is material and that there
were reasonable grounds for failure to adduce such evidence in the
hearing before the Commission, the court may order such additional
evidence to be taken before the Commission and to be adduced
upon the hearing in such manner and upon such terms and
conditions as to the court may seem proper. The Commission may
modify its findings as to the facts, by reason of the additional evidence
so taken, and it shall file such modified or new findings,