The Research On The Legal History Of U. S. Federal Securities Laws

It is not uncommon that law changes at the same time with the changes of social environment. However, only in a few specific historical periods, law will be forced to place a complete and thorough change, open up new areas and almost replace the traditional system of legal rules and institutions completely. Securities Acts of 1933 is one of the best samples of this kind of change.The traditional Anglo-American system of legal rules and institutions relied on the economic environment of immature and slow-developed mode of capitalist production before the mid-19th century, is mainly based on common law and equity law– trial by court and"making law by following a precedent"(stare decisis), and complemented by the legislature. When the securities activities gradually became flourishing and were generally accepted by the whole society, the traditional law almost only showed its incompatible side to it. At the beginning, the legal profession was still trying to solve various securities-related legal contradictions by interpretations or mandatory application of traditional law without logic. As times went by these approaches became full of limitations, therefore the statutes Securities Act of 1933 of U.S. came into being, by means of which replaced the traditional system of rules and institutions in the issue of securities. From then on securities law became an independent field of modern law. This thesis examines and studies the formation of the mandatory disclosure institution for securities issuance on the Securities Act of 1933, and tries to understand the nature and pattern of the contemporary law. Furthermore, it tries to provide a more abundant and referential sample for the social and legal change in China today.Chapter I investigates and analyzes the background of mandatory disclosure institution for securities issuance. The investigation is limited to the era which securities activities had been generally accepted by the public and the changed mode of production has created the most fundamental impact on the traditional legal institution. Accompanied with this change the public financing private corporations became the major group involved in the social economic activities. The financial innovation is the direct cause of the birth of the securities law.The traditional Anglo-American legal system is not designed for an emerging social environment Therefore it cannot safeguard the rule of law technically. First,"Caveat Emptor", the long-dominant maxim in commercial activities couldn't maintain the distribution activities in marketable securities and investment to purchase one of substantial equality of rights and obligations between the issuers/sellers and investors/buyers, and couldn't protect investors against issuers. Second, Even the shareholders, who are the owners of a public financing private corporations to couldn't protect themselves from abuse when they purchased the corporation's additional issuing securities. It was the emptiness of the ownership of the public financing private corporations or the legal protection for the owner of the public financing private corporations. In other words, ownership has lost the control of the distribution of benefits arising from ownership which traditional legal theory takes for granted control. These practical factors prompted the issuance of securities to generate a.Chapter II examines inheritance and change of the English Companies Act and U.S. Blue Sky Law by the mandatory disclosure institution for securities issuance.This chapter first checks the process which philosophy of disclosure were implemented in English Companied Acts. England is the world's first state that regulated securities activities with mandatory disclosure requirements. With the development of companies act, it accepted prospectus which used in the usage and established that the issuers'mandated obligations to disclose their particular information in the securities distribution activities must be higher than the investors who purchased securities. The method of prospectus disclosure was inherited by the Securities Act of 1933. However, the differences of the mandatory disclosure institution for securities issuance between the English Companied Acts and the Securities Act of 1933 are more than their similarities.Contrary to England Companies Acts, the blue sky law which United States adopted in 1910s represented a more complex model of regulation of securities issuance. As U.S. state securities legislation, blue sky laws can be divided into anti-fraud type, brokers licensing type, inspection type and disclosure type. The effects of blue sky law to the Securities Act of 1933 include the investigation of securities offering and trading by securities administration, and the information needed to be disclosed by issuers and dealers. Although the"merit regulation"of blue sky law was not inherited by federal securities act, these acts still played an important role in the formation of the procedures of the mandatory disclosure institution for securities issuance.Chapter III examines the evolution of the concept of"securities", which determines the application of the.First, the earliest meaning of securities in common law is security tools for debt. Any evidence (majority are formal instruments) could be used by debtor to guarantee that he would repay debt which was in the form of money are securities. These tools were called"securities for money"collectively and"securities"is an abbreviation in practice. Today, the various"securities"in the Securities Act did not all belong to"securities"at the beginning, Debt instruments and stock became securities in sequence. The abstract term"investment"was still in its embryonic stage when federal securities law came into birth.Second, the definition provisions of the Securities Act of 1933 only delimit the scope of application of the mandatory disclosure institution for securities issuance, rather than listing the legal definition of various types of securities. Federal securities statutes actually exclude the definition and rules of common law theory from their definition provisions. Chapter IV studies the process which the subjects who were accepted by the mandatory disclosure institution for securities issuance and were assumed the specific duties and civil responsibility. Issuance registration disclosure means requirement of submission registration materials to securities regulatory authorities before the issuance of securities. The Securities Act of 1933 provides that specific legal subjects should undertake statutory obligations to guarantee the truth and non-misleading of these registration materials. These subjects are the persons or organizations who play an important role in the process of securities issuance.Before the birth of the federal securities law, these subjects can be classified into two categories: the subjects regulated by law and equity, including issuers, directors, promoters and persons in control, and the subjects unconstrained by law and equity, including underwriters, dealers and experts. Law and equity regulated the first category by legal theory of trust or fiduciary, but these laws couldn't be applied logically. Even the common law can ignore these inherent logical contradictions, it still couldn't protect vulnerable investors in the capital market activities throughout the country's economic life. At the same time, it is almost impossible for law to regulate nonfeasance, misfeasance or malfeasance of the second category.All these problems were solved by the Securities Act of 1933. The imposed specific statutory obligations on the subjects by issuance registration disclosure, and ensured that they will perform their functions in securities issuance cautiously. It can be also understood that federal securities law is a legal system with the intent to restrain particular social groups.Chapter V analyzes the structure of civil liability provisions which enforce mandatory disclosure institution for securities issuance, and studies the inheritance and change of related Anglo-American civil liability rules prior to the 1933.First, this chapter examines the possible applicability of Anglo-American traditional civil liability to securities activities, and finds that both the inherent logical contradiction in theory and the obstacles of rules which prevented operations the vulnerable investors to obtain relief in practice. The difficulties are important causes which contributed to the replace Anglo-American traditional civil liability with a modern alternative securities civil liability.Second, this chapter compares the main structural difference between federal securities provisions of civil liability and Anglo-American traditional civil liability. After analyzing the provisions and legislative intent of the Securities Act of 1933, it is found that the securities civil liability is not traditional civil liability and it has a significant portion of administrative law. In addition, the civil liability provisions of mandatory disclosure institution for securities issuance do not completely reject the traditional civil liability. In a few words, the civil liability of mandatory disclosure institution for securities issuance presents a character of complexity and diversity.In the final part, the paper concluded that, although some research demonstrated that many of today's rules of the securities law has existed from two or three hundred years to the mid-19th century, the reformation of the securities regulation with the birth of the mandatory disclosure institution for securities issuance is still greater than absorption of old legal resources. The primary cause of the birth of U.S. federal securities law is generated in the social objective changes. In history, the reformers found that the existing legal system was impossible to protect the legitimate rights of the majority in the society. Therefore, they invented a new set of legal institution which cannot be accommodated in common law legal system to protect the general interests of vulnerable public investors.