The capital markets in the United States are principally regulated by federal government agencies, particularly the Securities and Exchange Commission (SEC).
The Securities Act of 1933, as amended (Securities Act), requires all offers and sales of securities in the United States to be made pursuant to an effective registration statement or an explicit exemption from registration. The Securities Exchange Act of 1934, as amended (Exchange Act), regulates, among other things, corporate reporting, stock ownership reporting, proxy solicitations, tender offers and insider trading. Foreign private issuers are subject to some of these rules, including rules on corporate reporting, but are exempt from others. An issuer, including a foreign private issuer, can become subject to the corporate reporting provisions of the Exchange Act by having:
- an effective registration statement under the Securities Act;
- at least US$10 million in assets and a class of equity securities held of record by either 2,000 or more persons or 500 or more 'unaccredited' investors (meaning investors who do not satisfy various tests intended to measure financial sophistication);2 or
- an outstanding class of securities listed on a US national securities exchange.
An issuer that is subject to Exchange Act reporting requirements must file annual and other reports with the SEC. Securities registered under the Exchange Act are also subject to the SEC's rules on tender offers. Issuers, and their officers and directors, may also be subject to the SEC's proxy rules and rules on stock ownership reporting, but foreign private issuers are exempt from some of these rules.
The perspective of the SEC statutes is that persons making investment decisions in securities transactions should have accurate and reliable information without any material misstatements or omissions. The detailed disclosure requirements that apply to such transactions, and to companies with an ongoing reporting obligation, are found in the rules promulgated by the SEC under the securities laws.
In addition to the SEC, other federal and state regulators and self-regulatory organisations, such as the Commodity Futures Trading Commission (CFTC) and the Financial Industry Regulatory Authority, have important roles in the oversight of the securities activities of banks, insurers and broker-dealers, in particular.
The SEC proposes and adopts rules under the federal securities laws every year. After a period of rules aimed at deregulation during the administration of President Donald Trump and under SEC Chair Jay Clayton, the current SEC administration, under SEC Chair Gary Gensler and during the incumbency of President Joseph Biden, is now pursuing its policy priorities, which partly involve rolling back policies of the Trump administration that it considers insufficiently focused on investor protection.