Question

1* During the late 1920s , approximately 55 oercent of all personal savings in the US were used to purchase securities. Pubic confidence in the business community was extremely high as stock values doubled and tripled in short periods jf time. The road to wealth was believed to be through the stock market, and everyone who was able participated. Thus, the public was severely affected when the Dow Jones Industrial Average fell 89 percent between 1929 and 1933. The public outcry arising from the decline in stock prices motivated the passage of major federal laws regulating the securities industry.
Required:
1. Describe the investment practicies of the 1920s  that contributed to the erosion of the stock market.
2. Explain the basic objectives of each of the followin:
(a) Securities Act of 1933.
(b) Securities Exchange Act of 1934.
3. More recent legislation has resulted from abuses in securities industry. Explain in the provisions of th Foreign Corrupt Practices Act of 1977.

Answer 1

2 (a) Basic Objectives of Securities Act, 1933 are:

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

- To prohibit deceit, misrepresentation and other fraud in the sale of securities.

2 (b) The purpose of Securities Exchange Act 1934 was to pick up the drawbacks of Securities Act 1933. Its purpose is to protect investors and to keep securities market fair and functional.