Accounting Series Releases - ASRs

Finance a la Shmoop! What is the Securities Act of 1933? Hey, is it these

axes? No, it's a different act, or a whole bunch of Acts in the 30s and the

40s. All right, well for a long time the

little guy had, well not really much more than a prayer, when it came to investing [man praying in church]

his money. Like investing it well. The stock market appeared to be this wild,

wild, Westy thing, with few rules and a whole lot of insider trading information,

driving the bus, or carriage, or whatever they had back then. In fact before 1933,

securities laws were a, state thing. Each state had its own view as to how much

the poor uneducated farmer should be protected by the government. In fact

most really weren't protected at all. Making matters even worse, States [man and woman trading on map]

citizens, invested in each other all the time. Like across the state border. So

what would then happen when one set of state's laws, applied to one side of the

trade and one state set of laws, was conjoined to another set of laws, applied

to the other in a different state. Yeah that was a problem. Clearly we needed,

national laws and that's when the 1933 Securities Act was born, setting federal

law above state law. But keeping state laws generally intact when the [Uncle Sam]

intrastate activities were happening. What did all that mean? Well it

meant that the default laws generally revolved around whatever the state had

already in place. Except in the case where transactions, required a federal

purview, or look-see. Because the transactions happened among, two or more

states, or that they violated some major federal law. Like discrimination or

something like that down the line. Well the notion here, was that, farmers were

being sold acres of, quote, Blue Sky, unquote. Like you had to pay for the blue [two men in field]

sky and we're not talking about smog here. Instead of things of real value.

Right, like farmers would believe that they could buy an acre of blue sky.

Sorry, farmer Joe, we're just keeping it real there, you really did try to buy

acres of blue sky. Was solely because, farmer Joe, did not possess the education, [squirrels in head]

to determine the difference between a real investment opportunity and a fake

one. Finally the government, well they just had to step in and protect the

average Joe, from the average, you know Schmo.[man talking in front of parchment]