Securities Acts

During the late 1920s, approximately 55 percent of all personal savings in the United States was used to purchase securities. Public confidence in the business community was extremely high as stock values doubled and tripled in short periods of time. The road to wealth was believed to be through the stock market, and everyone who was able participated. Thus, the public was severely affected when the Dow Jones Industrial Average fell 89 percent between 1929 and 1933. The public outcry arising from this decline in stock prices motivated the passage of major federal laws regulating the securities industry.

Required:

Discuss the investment practices of the 1920s that contributed to the erosion of the stock market and the resulting legislation which is the Securities Act of 1933 and the Securities Exchange Act of 1934. As companies started doing business internationally, additional legislation was needed due to abuses in the securities industry. Explain the provisions of the Foreign Corrupt Practices Act of 1977. What other legislation can you think of that was needed in order to restore investor confidence? Are there moral and ethical issues involved?