Running Head: GOVERNMENT REGULATION IN THE ACCOUNTING INDUSTRY
Government Regulation in the
Securities Acts of 1933 and 1934
• Brief History of the Securities Act of 1933
• Objectives of the Securities Act of 1933
• Summary of the Securities Act of 1933
• Necessity of the Securities Act of 1934
• Summary of the Securities Act of 1934
• Peat Marwick Fraud/Scandal
The Foreign Corrupt Practices Act of 1977
• Brief History of the Foreign Corrupt Practices Act of 1977
• Summary of the Foreign Corrupt Practices Act of 1977
• Kellogg Brown & Root LLC Fraud/Scandal
Sarbanes Oxley Act (SOX)
• The ...view middle of the document...
The Act created new standards for corporate accountability and new penalties for not following the standards. It specifies new financial reporting responsibilities, which include new internal controls and procedures.
It seems as though as time goes by, the amount and scope of regulations keeps increasing. This is a result of corrupt and unethical activities that keep taking place within our corporate world. Are these regulations helping us at all? Perhaps we are on the verge of over-regulation. This paper will discuss these regulations in order to answer this question.
Securities Acts of 1933 and 1934
Brief History of the Securities Act of 1933
The Securities Act of 1933 was enacted as a result of the market crash of 1929. It was the first major piece of federal legislation to apply to the sale of securities. The legislation was enacted as the need for more information within and about the securities markets was acknowledged (Parker Waichman LLP , 2012). It is also known as the Truth in Securities Act because the Act would cause securities companies to provide potential investors with enough information to make informed investment decisions.
Objectives of the Securities Act of 1933
The 1933 Act has two basic objectives:
• to require that investors receive significant (or “material”) information concerning securities being offered for public sale;
• to prohibit deceit, misrepresentations, and other fraud in the sale of securities to the public (Parker Waichman LLP ).
Brief Summary of the Securities Act of 1933
The Act requires that securities offered or sold to the public in the U.S. must be registered by filing a registration statement. A prospectus is filed along with the registration statement.
Under the Act, the registration statement must include:
• a description of the issuer's properties and business;
• a description of the securities to be offered for sale;
• information about the management of the issuer;
• information about the securities (if other than common stock);
• financial statements certified by independent accountants (Parker Waichman LLP).
If a statement is incomplete or inaccurate, the statement is not allowed to become effective and a misstatement or omission of material fact can result in the registration's suspension.
Necessity of the Securities Act of 1934
Security transactions that are conducted with securities exchanges and over-the-counter markets are affected by national public interest. This makes it necessary to regulate these transactions and any practices and matters related to them. Regulations help to protect interstate commerce, the national credit, the Federal taxing power, and make the national banking system and Federal Reserve System more effective. Regulation also helps to insure the maintenance of fair and honest markets in such transactions (Sarkar, 2012).
The Securities Act of 1934 also established the Securities and Exchange Commission (SEC). The Act gives the SEC power to...