Essential Financial and Security Regulations

There are laws that govern institutions that deal with securities. The Securities Act of 1933, clarify a security is any stock, bond, treasury stock, note, debenture, evidence of indebtedness, fractional undivided interest in gas, oil, or other mineral rights, collateral-trust certificate, certificate of participation or interest in any profit-sharing agreement, transferable share, investment contract, preorganization certificate or subscription, certificate of deposit for a security, or voting-trust certificate.  A variety of financial and security regulations are discussed at https://chrisbrummer.org.

 Federal law determines insider trading as illegal because it leaves those who do not have inside information at a disadvantage.  The company grants its officers, directors, or important shareholders ease access to its vital private information which makes then to have more advantages than other stakeholders.  Prices of shares may fall in the future if the company makes huge losses or losses key contracts, but other people may find out later after the officers, directors, or important shareholders of the company has sold their shares because they can get the information before the rest of the people.  The organization or a person can sue the person who has participated in insider trading on behalf of the organization and recover the short-swing profits as a penalty by the law.

 The foreign corrupt practices act (FCPA) of 1997 was incorporated into the securities exchange act that was formed in 1934.  Falsified financial statements by an organization is an unlawful act under FCPA.  The 1970s investigations by Watergate Special Prosecutor and Securities and Exchange Commission (SEC) found out that many companies that were getting US licenses or signing contracts with foreign official were bribing these officials.  The companies had to hide the payments that they make in bribe in multiple financial statements to maintain great images to the public. Congress had to do mitigate abuses of financial reporting by creating the FCPA that prevents the issuer, “any director, employee, officer, or agent” of an issuer or a stockholder acting as a legal representative of the issuer from using either their interstate commerce or mails corruptly to offer, promise or pay anything of value to foreign political parties, foreign officials, or candidates with the aim of convincing the official to influence the government to favor the US corporation. See more about financial regulation at chrisbrummer.org.

 The federal government of the US amended the financial regulation and created the dodd-frank act that Obama signed in 2010. The amendment improves transparency and accountability financial system hence it promotes the financial stability in the US. It also protects US taxpayer through ending bailouts, protects consumers from experiencing abusive financial services practices and ends institutions that feel that they cannot end no matter how they treat consumers. For more information, click on this link: https://en.wikipedia.org/wiki/Economic_security.
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