The Uniform Securities Act is a set of laws that were created for the purpose of regulating securities at the level of the state. The Act is meant to curb securities fraud at this lower level with assistance from the Securities and Exchange Commission (SEC).
If you are familiar with the state of affairs in the business word, then you know that there are a lot of activities happening. Not all businessmen are registered to carry out their craft like other straightforward professions such as law and medicine. In fact, most investment dealers and their investments are not registered federally. Therefore, the SEC finds it a tough task to pursue security violations and protect all investors.
To deal with this problem, the Uniform Securities Act was created. The act came into being in 1933 but has since evolved and undergone changes to align it with the business landscape. As you will later learn, if you are considering a career as a stock broker, you must be familiar with these laws.
The Uniform Securities Act: Federal Vs State Law
It is important for you to note that there are two concurrent regimes that regulate securities at the state and the federal level. The Uniform Securities Act is a state-level regulation although drafters of the law have been constantly working on it to ensure that it is aligned with the federal law. In other words, there are several laws and clauses that work together to achieve the same objective.
What is the role of the Act?
The Uniform Securities Act clearly points out the role of the states in regulating the sale of securities and commodities. In any business, there is always a loophole for fraudulent activities even if the security is covered by both the federal and the state law. Because there are many versions of securities on sale, not each one is guaranteed that it is a federally covered security.
This is the reason pyramid schemes are generated locally with all kinds of scam sales and misrepresentation. It would be disastrous if there isn’t a way of addressing victimized investors from both angles (state and federal).
The law gives a level playing ground and hopes to redress issues that make selling securities a treacherous venture. Securities Law at both levels work by complimenting each other. So, if there is a fraudulent scheme at the federal level, it most likely would not evade the state level.
The Uniform Securities Act exists not only to regulate sales but also gives procedures on how companies dealing with securities are created. Feel free to inquire and seek for clarifications from a legal counsel for any additional information that you might need.