What does the Securities Act of 1933 primarily govern?

The Securities Act of 1933 primarily governs the issuance of new securities and the required disclosures that must be made to potential investors. This act was designed to ensure transparency in the financial markets by requiring issuers of securities to provide detailed information about the securities being offered, including financial statements, risks associated with the investment, and the business operations of the issuing company. The overarching goal is to prevent fraud and misrepresentation in the sale of securities, thereby protecting investors and fostering market integrity.

The act mandates that any offer or sale of securities must either register with the Securities and Exchange Commission (SEC) or qualify for an exemption. This registration process is crucial for ensuring that investors have access to the necessary information to make informed decisions.

While the regulation of stock exchanges and investment companies is essential to the broader framework of securities regulation, these activities fall under different acts and regulations. The trading of derivatives and futures is governed by other legislation, such as the Commodity Exchange Act, which focuses specifically on these types of financial instruments. Thus, the correct answer highlights the specific focus of the Securities Act of 1933 on new securities’ issuance and the disclosure requirements that accompany it.