Comprehensive Study on the Juridical Evolution of Securities Governance: Detailed Insight Provided
In the aftermath of the stock market crash of 1929, the Securities Exchange Act of 1934 was enacted to restore investor confidence and establish a framework for securities regulation. This marked the beginning of a comprehensive regulatory regime aimed at ensuring transparency, preventing fraud, and maintaining fair, orderly, and efficient securities markets.
The Securities Act of 1933, passed prior to the Exchange Act, mandated the registration of securities before public sale and required companies to file extensive disclosures with the Securities and Exchange Commission (SEC). Basic Inc. v. Levinson, a landmark Supreme Court case, further influenced the materiality standard in securities fraud litigation.
Since the 1934 Act, regulatory developments have increasingly focused on balancing investor protection with facilitating capital formation, especially for smaller and emerging companies. Amendments and new laws have expanded and refined the regulatory criteria for public companies, introduced confidential filing procedures, and adjusted disclosure obligations to reflect market realities.
One such development was the Jumpstart Our Business Startups (JOBS) Act of 2012, a significant reform aimed at easing securities regulations to facilitate capital raising by emerging growth companies (EGCs) and smaller issuers. The act allowed confidential review of draft registration statements by the SEC, reduced disclosure requirements for EGCs, and increased the threshold for mandatory registration under Section 12(g).
More recently, the ELEVATE Act of 2025 amended the Securities Exchange Act of 1934 to enable EGCs to present two years of audited financial statements in IPOs and spin-off transactions. It also permits confidential filing of draft registration statements with the SEC, with public filing required no later than 10 days before effectiveness, enhancing the ability of smaller companies to go public with some regulatory flexibility.
The SEC, established in 1934, enforces the original 1933 and 1934 Acts and their amendments, requiring public companies to provide regular, meaningful disclosure through annual and quarterly reports and to promptly disclose material events. These ongoing disclosure requirements aim to protect investors and maintain fair, orderly, and efficient securities markets.
Cross-border capital flows, global financial crises, and the integration of technology in trading practices are key factors shaping international influence on U.S. securities regulation. International collaboration on securities regulation will likely gain prominence to enhance investor confidence and reduce regulatory arbitrage. The International Organization of Securities Commissions (IOSCO) guidelines have significantly impacted U.S. regulatory approaches in securities regulation.
Technological advancements like blockchain, high-frequency trading, and artificial intelligence are transforming the landscape of securities regulation, necessitating the adaptation of regulatory frameworks. Emerging threats such as cyber risks will necessitate adaptive regulatory measures to ensure the integrity of financial markets in an era marked by digital transformation and rapid information dissemination.
Cryptocurrencies raise questions about classification and the applicability of existing securities laws, complicating enforcement and compliance for market participants. Decentralized finance (DeFi) poses challenges to traditional oversight mechanisms, requiring regulators to devise effective strategies to maintain stability while encouraging innovation in the securities market.
The future of securities regulation hinges on a proactive approach that is responsive to technological innovations and evolving market dynamics. Ongoing dialogue among regulators, market participants, and legal scholars will be critical in shaping an effective regulatory landscape. The future requires a balance between innovation and precaution, with a focus on safeguarding all stakeholders involved in the rapidly evolving financial landscape.
Trust law and finance intersect in the regulation of investing, as newer laws like the Jumpstart Our Business Startups (JOBS) Act of 2012 and the ELEVATE Act of 2025 aim to balance investor protection with facilitating capital formation for businesses, particularly small and emerging ones. These acts enable some regulatory flexibility for businesses while maintaining disclosure requirements aimed at protecting investors.
