Originally from:
International Securities Law and Regulation - 2nd Edition - Looseleaf
International Securities Law and Regulation - 2nd Edition - Electronic
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United States
Robert A Solomon and Clifford R Pearl
Solomon Pearl Blum Heymann & Stich LLP
New York, New York,
and Denver, Colorado, United States
Regulatory System
In General
In response to the stock market crash of 1929 and the Great Depression that followed, the
United States Congress enacted a number of statutes that form the basis for the regulation
of securities in the United States. These statutes are the cornerstone of the modern United
States federal securities regulatory system.1
The securities laws are intended to assist in facilitating capital formation by issuers (entities
that issue securities to investors), while emphasising the need to provide full and fair
disclosure to potential investors and existing shareholders. The basic tenet of the United
States securities laws is not to directly control or prevent investment or to substitute the
judgment and values of the government for market forces. Rather, the legislation mandates
disclosure standards and patterns of behaviour so that information made available
by issuers accurately reflects the business operations, risks, and benefits of a new investment
or existing operation.
The objective is to make readily available sufficient accurate information so that potential
investors can make a fully informed decision whether to buy, to continue to hold, or to sell
a security. The United States securities laws also provide severe penalties to deter misrepresentation,
deceit, and other fraudulent behaviour and to penalise persons or entities that
act outside the law and regulations.
Securities transactions in the United States are subject to regulation at both the federal and
the state level. However, the primary regulation of securities laws is on the federal level.
Federal pre-emption, over competing state interests, stems from the Interstate Commerce
Clause of the United States Constitution.2 Federal securities laws preserve the right of the
United States
Regulatory System
In General
Federal Law
Securities and Exchange Commission
State Law
Extraterritorial Reach of United States Securities Laws
United States Markets and Market Listing Requirements
In General
American Depository Receipts
Major Exchanges and Markets
Public Offerings by Foreign Issuers
In General
Definition of a Foreign Private Issuer
Advantages and Disadvantages of Going Public in the United States
Non-United States Issuer Public Offerings
in the United States
American Depository Receipts
Private Placements by Non-United States Issuers
Exemptions Available to Non-United States Issuers
Restrictions on Transfer
Rule 144A Restricted Securities
Investment Outside the United States and Cross Border Transactions
In General
General Principle
Safe Harbours for Transactions by Issuers, Distributors, or Affiliates
Safe Harbour for Resale Transactions by Persons Other than Issuers, Distributors, or Affiliates
Restrictions on Resale
Crossborder Transactions
Trading of Non-United States Securities
In General
Exchange Act Registration
Form 20-F
Annual Reports
Interim Reports
Proxy Requirements
Short-Swing Trading
Take-Over Provisions; Disclosure of Beneficial Ownership of United States Issuer
Multi-Jurisdictional Disclosure System for Canadian Issuers
Jurisdictional Conflicts
Subject Matter Jurisdiction
Procedural Requirements
Conclusion
