During an initial public offering (IPO), the issuer and underwriter must follow strict guidelines and rules. These regulations come from the Securities Act of 1933, which oversees the primary market.
The financial markets were full of fraud, deceit, and manipulation in the early 1900s, some of which contributed to the Great Depression. Signed into law to protect the investing public, the Securities Act of 1933 requires issuers to fully divulge the characteristics of the securities they intend to sell.
In the following sections, we’ll learn about the rules and regulations within the Securities Act of 1933 that governs the IPO process.
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