Under the Exchange Act, the SEC has the authority to register, regulate and discipline broker-dealers, regulate the securities exchanges, and review actions of the securities exchanges' self-regulatory organizations (SROs). The SEC has power to promulgate rules pursuant to the federal securities acts, and to enforce federal law and its own rules. The Exchange Act created the Securities and Exchange Commission(SEC), a federal agency with the authority to regulate the securities industry. The Securities Act and the Exchange Act are federal laws that provide for private causes of actions under which investors may recover for fraud and certain violations of the registration and disclosure processes mandated by the federal securities laws. Congress intended to ensure that investors had access to balanced, non-fraudulent information. The efficacy of these disclosure requirements is backed up by extensive liability for fraud under the Securities Act and the Exchange Act for both issuers and sellers of securities. Federal securities laws primarily accomplish this by requiring companies to disclose information about themselves and the securities they issue. The Securities Act and Exchange Act give investors access to information about the securities they buy and the companies that issue those securities. The key theme of the federal securities law is disclosure. After a series of hearings that brought to light the severity of the abuses leading to the crash of 1929, Congress enacted the Securities Act of 1933 (the "Securities Act"), and the Securities Exchange Act of 1934 (the "Exchange Act"). In response to this calamity and at President Franklin Roosevelt's instigation, Congress enacted laws to prevent speculative frenzies like those in the 1920s. With thousands of investors buying up stock in hopes of huge profits, the market was in a state of speculative frenzy that ended in October 1929, when the market crashed as panicky investors sold off their investments en masse. In many cases, the promises made by companies and brokers had little or no substantive basis, or were wholly fraudulent. Brokers in turn sold this stock to investors based on promises of large profits but with little disclosure of relevant information about the company. In the period leading up to the stock market crash, companies issued stock and enthusiastically promoted the value of their company to induce investors to purchase those securities. Many banks had invested the money in the market, so many people could not withdraw their money, causing the economy to spiral down even more and bringing about a sobering end to the Roaring Twenties.The development of federal securities law was spurred by the stock market crash of 1929, and the resulting Great Depression. The crash led to a lot of collective panic from the American people who started withdrawing money from banks. The Wall Street Crash of 1929 was not caused by one single factor but a combination of multiple causes. It wasn’t until after the Great Depression had begun that President Hoover started intervening in the market, which was ultimately too late. These policies led to a severe wealth gap in American society and made it so that the government was not well-equipped to prevent and react to the crash. Under the Republican administrations of Warren Harding, Calvin Coolidge, and Herbert Hoover, there was very little regulation of financial institutions and corporations, lower taxes, and decreased federal spending. According to the laissez-faire economic philosophy, the government should not interfere in the market because the market can correct and regulate itself and government regulation will only restrain economic growth. In the background of all of this was the government’s overarching laissez-faire economic philosophy by Republican presidents. Many companies suffered losses due to this, which led to their share prices plummeting. Because factories produced more than there was demand for these goods, there was an oversupply, which led to lower prices. There was also overproduction of goods in manufacturing and agricultural industries.
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