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Bus Ethic 1934 Securities

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Submitted By Yucheng
Words 3935
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Introduction:
This paper addresses the question how does the law impact the society and business and does this law really work. To attend to these questions, the essay is organized in two sections. In the first section, I analyze the relationship between the 1933 Act and the society by using the concept of libertarianism and the “vail of ignorance” of Immanuel Kant. In the second section, I examine the Securities Act of 1933 by using the accounting skill to argue that 1933 Act did not prevent the inside trading and financial statement manipulation.
History of Act: public policy prescription: In the absence of the securities laws, a business firm could basically decide the stock price of their privately-owned company without any governmental supervision and, thus, be free to act with impunity in defrauding both the company and the public. This is the reason the stock price crashed down on “black Friday”. Securities Act of 1933 is in ascertaining that a firm’s disclosure is as accurate as possible, which makes the securities market more fair and transparent in its effort to control fraud perpetrated by unscrupulous business owners on a gullible public marketplace.
Market failure:
Business’ goal is always for the greatest profits, by taking the advantage of whatever ways they can use, such as fraud. In 1929, business people took the advantage of the absence of the securities laws to defrauding both the company and the public.
Trace its implementation:
Securities Act of 1933 is implemented by Securities and Exchange Commission(SEC), an independent quasi-judicial regulatory agency that was established by President Franklin D. Roosevelt after the great depression.The main goal of SEC is to regulate the stock exchange, the companies whose securities traded on them, and the brokers and dealers who conducted the trading(Longstreth, 1984). SEC does not make the

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