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What is Securities Law, Why Does it Matter, and What are the Basics of Compliance?

On Behalf of | Oct 6, 2017 | Securities Laws

You’ve probably heard this term securities law floating around, but you’re a small or medium-sized company. What does it matter to you? Truth is, it matters a lot. A lot of people think of the FCC, investigations, big things on security law, so they think it’s companies like General Electric, IBM, Google, Facebook, other companies that are publicly traded on the stock market. Those are the ones that need to worry about securities law, not smaller companies, but guess what? It’s not so. Security laws are written very broadly.

When we had the problems in the 1930s with the big stock market crash, the securities laws were put in place, and they gave them very broad meaning of security. When you read the laws, while they can be technically interpreted situationally in different ways, basically most laws define securities as any ownership interest of a company, so a lot of stuff is falling under the definition of security, which means a lot of coverage. Those ownership interests of your small company are probably securities. They’re probably regulated at the federal and the state level. Yes, they may be regulated at two levels, and the two regulations may be inconsistent with each other.

Now, the basic rule is unless otherwise exempted, every securities offering must be registered, must be filed with the state and the federal authorities, but there are exemptions available. You just have to find them, and then you have to find out whether your exemption applies at only the federal level or also exempts the state level. You need to do a very careful analysis. These are complicated matters, but the important thing to take away is securities laws are broadly defined, and they apply in a lot of situations. They may trip you up, so be careful. Get good counsel. Make sure you think through things correctly. Have you thought about securities laws before? Have you worried about these issues? Are you surprised by the broadness of securities laws? Let us know in the comments below.

This posting is intended to be a tool to familiarize readers with some of the issues discussed herein.  This is not meant to be a comprehensive discussion and additional details should be discussed with your attorneys, accountants, consultants, bankers and other business planners who can provide advice for your circumstances.  This article should not be treated as legal advice to any person or entity. Keigirl.

About the Author

Shawn McBride — R. Shawn McBride is the Managing Member of The R. Shawn McBride Law Firm, PLLC. Shawn works successful, private business owners in their growth and missions to make a company that stands the test of time. You can email R. Shawn McBride or call 407-517-0064.

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