This thesis will be concerned with the historical development of securities regulation in the United States. The purpose of this thesis is to show that the most important developments in this area took place in the 1930s in response to the Stock Market Crash of 1929. Therefore, much of the first part of the thesis will examine the historical events leading up to the crash and the legislative responses to the crash, which resulted in the Securities Act of 1933 and the Securities Exchange Act of 1934. The latter part of the thesis will examine the regulatory efforts of the Securities and Exchange Commission (SEC) which took place in the 1930s and the case law which developed as a result of these efforts.
The first chapter will discuss the historical background to the enactment of the Act. The enactment of the federal regulation of the securities industry must be understood in the context of the early Twentieth Century. Although the market for securities was not a new idea, its popularity with the public did not mature until after the First World War. Prior to that time, securities transactions were almost solely the province of the wealthy and educated class. Although England had long ago implemented some form of regulation of the securities industry (always in response to economic crises brought about by the bursting of "bubbles"), regulation of the industry in the United States was largely left to the individual states. As will be noted in Chapter 3, there was an unanswered question as to whether the regulation of securities was more properly the province of the state governments, rather than the federal government. The only federal action taken prior to the new deal was the promulgation of regulations by the Interstate Commerce Commission concerning the issuance of securities by common carriers under its jurisdiction. In fact, state laws regulating securities were challenged in federal court as being unconstitutional. ...