Regulation in our nation today – too much or not enough? That is the question this paper addresses. The Securities Acts of 1933 and 1934, the Foreign Corrupt Practices Act of 1977, along with the Sarbanes Oxley Act will be highlighted and discussed.
The Securities Act of 1933 was the first major piece of federal legislation regarding the sale of securities. Prior to this legislation, the sale of securities was primarily governed by state laws; however, the market crash of 1929 raised some serious questions about the effectiveness of how the markets were being governed. Because of the turmoil surrounding the investing community at this time, the federal government had to bring back ...view middle of the document...
The SEC investigation found that Keoko Kawamura engage in two separate fraudulent schemes to raise money from investors while presenting herself as an
investment and hedge fund expert. She actually had virtually no prior trading experience. The administrative proceedings will determine if Kawamura must pay any remedial damages.
The SEC also announced fraud charges against a New York-based investment advisory firm and two executives for distributing falsified performance results to prospective investors in two hedge funds they managed. In response to the SEC’s request for emergency relief for investors, a US District Court Judge issued a temporary restraining order, imposed an asset freeze to protect client assets, and temporarily prohibited the defendants from soliciting new investors or additional investments from existing investors.
Congress passed the Sherman Act in 1890 to prevent extreme concentrations of economic power. Because this statute was aimed at the Standard Oil Trust, which then controlled the oil industry throughout the country, it was termed antitrust legislation. Both the Justice Department and the Federal Trade Commission have authority to enforce the antitrust laws. In addition to the government, anyone injured by an antitrust US Regulation Today Page 5
violation has the right to sue for damages. In most other countries only the government is able to sue antitrust violators. However, a successful plaintiff in the United States can recover triple damages from the defendant.
The Clayton Act prohibits mergers that are anticompetitive. Companies with substantial assets must notify the Federal Trade Commission before undertaking a merger. This notification gives the government an opportunity to prevent a merger ahead of time rather than trying to untangle one after the fact.
Congress passed the Robinson-Patman Act in 1936 to prevent large chains from driving small, local stores out of business. Under this act it is illegal to charge different prices to different purchasers if the items are the same and the price discrimination lessens competition. It is legal to charge a different price to a particular buyer if the costs of serving this buyer are lower or the seller is simply meeting competition.
[The Foreign Corrupt Practices Act (FCPA), enacted in 1977, generally prohibits the gift of bribes (anything of value) to foreign officials to assist in obtaining or retaining business. The FCPA can apply to...