Describe why federal securities laws were originally enacted by Congress.
Explanation of Solution
In 1902, the Industrial Commission suggested that all companies owned by public are needed to disclose necessary information which includes the yearly financial reports. The Congress enacted two primary pieces of the legislation of securities which are designed for restoring the trust of the investors for the capital market.
1. The Securities Act of 1933, which is known as truth in securities law which regulates the primary offerings of securities by a company or underwriter.
2. The Securities and Exchange Act of 1934 created the SEC which regulates that the securities are traded through brokers and exchanges.
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