Financial Industry Regulatory Authority (FINRA) Practice Exam

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Prepare for the Financial Industry Regulatory Authority (FINRA) Exam with our comprehensive quiz. Study with flashcards and multiple choice questions, featuring detailed explanations. Ace your exam with confidence!

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Which federal act ensures that the investing public is informed about new securities in the primary market?

Securities Exchange Act of 1934
Uniform Securities Act
Investment Company Act of 1940
Securities Act of 1933

The correct answer is: Securities Act of 1933

The Securities Act of 1933 is the federal act that was specifically designed to ensure that the investing public receives adequate information about new securities being offered in the primary market. This act mandates that companies provide full and fair disclosure of all material facts through a registration process, which includes filing a detailed prospectus. The intent behind this legislation is to protect investors from fraud and misrepresentation while promoting transparency in the securities market. By requiring issuers to register their securities with the Securities and Exchange Commission (SEC) and to provide comprehensive disclosures, the act helps create a level of trust in the financial markets. This allows investors to make informed decisions based on the pertinent information about the risks and rewards associated with the investment. While other acts like the Securities Exchange Act of 1934 focus on the secondary market and trading of securities, and the Investment Company Act of 1940 regulates investment companies, the Securities Act of 1933 is specifically aimed at new offerings, establishing it as the cornerstone of securities regulation in the primary market.