Securities laws are regulations established by the government to safeguard investors and maintain the integrity of financial markets by governing the issuance, trading, and disclosure of stocks, bonds, and other investment instruments.
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Last Updated: December 12, 2025
Securities laws are the laws, rules, and regulations governing the purchase and sales of securities in a given market or country. In the U.S., the securities law definition also applies to certain standards and practices for auditors. That aspect of securities laws covers individuals and firms who audit banks, brokers, and companies that issue and deal in publicly offered securities.
The definition of securities laws can even include rules and regulations issued by self-regulatory organizations like stock exchanges or trade organizations like the Financial Industry Regulatory Authority (FINRA).
Securities laws are designed to protect investors. By design, investors have less information about financial products than the companies that issue them or the bankers that sell them. The meaning of securities laws is to make the playing field a little more even between investors and publicly traded companies.
A security itself is only a piece of electronic paper. A security’s worth comes from the claims a holder has upon the assets of the company that issued the security. Securities’ value can also depend upon a variety of complex factors. These may include the issuer’s financial condition, the issuer’s management, and the competitive, tax, and regulatory climate the issuer operates in. The advantage of securities laws is that they help standardize the way companies are valued and the type of information available to potential investors.
The U.S. has many securities laws to help investors stay informed. Some fundamental securities laws in the U.S. include:
Congress enacted the first of the federal securities laws, the Federal Securities Act of 1933, right after the Great Depression. The Securities Act of 1933 regulates the public offering and sale of securities in interstate commerce. This act also requires the registration of securities with the Securities and Exchange Commission and mandates the disclosure of information to investors.
Businesses and individuals alike benefit from robust securities laws. When someone invests their small business assets (or even personal assets), they want to be sure they’re putting money in the safest markets available. Securities laws help ensure a consumer is as protected as they can be when they take investment risks.
In some countries, like the U.S., securities laws can come with onerous requirements. If a business owner looks to issue public securities for their company, there are expensive compliance requirements to uphold. Setting up a corporation that could someday issue publicly traded securities is an expensive undertaking, thanks to securities laws in the U.S. Entrepreneurs would be wise to carefully consider the structure of the legal entity they’re creating; knowing the advantages and disadvantages of securities laws can help confirm whether or not the business will thrive as a corporation with publicly traded securities.
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Disclaimer: The content on this page is for information purposes only and does not constitute legal, tax, or accounting advice. For specific questions about any of these topics, seek the counsel of a licensed professional.
Written by ZenBusiness Editorial Team
The ZenBusiness Editorial Team has more than 20 years of combined small business publishing experience and has helped over 850,000 entrepreneurs launch and grow their companies. The team’s writers and business formation experts are dedicated to providing accurate, practical, and trustworthy guidance so business owners can make confident decisions.
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