Under the Securities Act of 1933, subject to some exceptions and limitations, it is unlawful to use the mails or instruments of interstate commerce to sell or offer to sell a security to the public unless
A) A surety bond sufficient to cover potential liability to investors is obtained and filed with the Securities and Exchange Commission
B) The offer is made through underwriters qualified to offer the securities on a nationwide basis
C) A registration statement has been properly filed with the Securities and Exchange Commission, has been found to be acceptable, and is in effect
D) The Securities and Exchange Commission approves of the financial merit of the offering

Question

Quizplus · Accepted Answer

The correct answer is C. Under the Securities Act of 1933, a security may not be sold or offered for sale to the public unless a registration statement has been properly filed with the SEC, found to be acceptable, and is in effect. This is the primary way that investors are protected as the registration statement discloses all relevant information about the security being offered, including risks and conflicts of interest. Choices A and B are incorrect as they are not requirements under the Securities Act of 1933. Choice D is incorrect as the SEC does not approve the financial merit of an offering, rather they review that the registration statement fully and accurately discloses all relevant information.

Under the Securities Act of 1933, Subject to Some Exceptions