Federal Securities Act

Congress passed the Federal Securities Act in 1934. Before securities could be offered for sale they had to be accompanied by full and true information. Misleading information or the absence of pertinent information could result in prosecution.

A Federal Trade Commission was set up to supervise the stock market but this was replaced by the Securities and Exchange Commission in 1934. The commission had five members and enforced the publication of stock prospectuses and the regulation of exchange practices.