Once a security is issued, it can be sold repeatedly. Such sales may be accomplished on a physical exchange, such as the New York Stock Exchange (NYSE), where agents of buyers and sellers deal directly with each other. Others may be made on an over-the-counter market, where trades occur electronically over a computer network linking dealers across the nation. An example is NASDAQ, the National Association of Securities Dealers Automatic Quotation system. [To learn more, see www.nyse.com and www.nasdaq.com]. The federal law that governs post-issuance securities trades is the Securities Exchange Act of 1934 (1934 Act), which also created the SEC. Its purposes are the same as those of its 1933 counterpart: 

(1) To ensure full disclosure of all material information so investors can make sound decisions.

(2) To prevent fraudulent conduct in the markets. A company is generally subject to the 1934 Act’s reporting requirements if it has publicly traded securities or has both more than $10 million in assets and more than 500 nonaccredited shareholders.

Questions 

1. Explain the purposes of the 1934 Act. 

2. Compare and contrast the three primary required SEC filings under the 1934 Act.