D&O Claims – Overview of US Securities Law

The Securities Act of 1933 (“the 1933 Act”) regulates the process by which securities are first offered and sold to the public, and has two primary objectives: (1) to ensure that investors receive full and accurate information in relation to securities offered for public sale; and (2) to prohibit misrepresentations and other fraud in relation to the sale of securities.

Registration Requirements -

Subject to limited exceptions (e.g., private or limited offerings), the 1933 Act requires that all securities offered for sale in the US first be registered with the Securities and Exchange Commission (“SEC”). The 1933 Act and supporting rules govern the registration process and require (among other things) that a Registration Statement be filed with the SEC. The Registration Statement is an SEC-proscribed form that contains certain information about the business of the issuer company, the security being sold, and additional information about the management of the company and its financial condition. It is different than the sales document for investor use, which is called the Prospectus (or offering document). The Prospectus is the sales/ marketing presentation, while the Registration Statement seeks SEC approval of the sale.

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