The industrial revolution started in the United States during the 19th century. Privately owned corporations organized by authority of state law. As a result, competition soon developed among some states to have corporation laws that were very favorable to the formation and operation of a corporation. A state such as Delaware became popular for corporations because of a law giving broad discretion to management.
Laws did not initially exist in the United States to regulate the issuance of securities and trading in the securities markets. The first such laws enacted were on the state level and not on the federal level.
Kansas enacted the first securities law in the United States in 1911. A number of states, especially in the Midwest, then began to enact similar laws. The purpose of these state securities laws, or Blue Sky Laws, was to regulate the Eastern promoters who were selling Midwesterners securities of companies with very dubious assets. Constitutional challenges to these laws were unsuccessful and most states then enacted securities laws.
After the rampant stock market speculation of the 1920s, and the famous crash of 1929, the Roosevelt Administration proposed, as part of its New Deal legislation, securities regulation on the federal level.
The Securities Act of 1933 was the initial result. The administration of this Act vested in the Federal Trade Commission. The Act required the registration of securities offered by companies and provided for full disclosure to investors through a written prospectus.
Further regulation of securities on the federal level resulted from the Securities Exchange Act of 1934. This Act provided for the regulation of securities exchanges and the broker-dealers who buy and sell securities. The Act also created the Securities and Exchange Commission to administer the federal securities laws.
The Public Utility Holding Company Act of 1937, the Trust Indenture Act of 1939, the Investment Company Act of 1940, and the Investment Advisers Act of 1940 followed as federal securities law became more comprehensive.
These six Acts provided the basis for the federal securities regulation that is still in effect today. The Securities Investor Protection Act of 1970 provided certain federal protection to accounts of investors held by brokerage houses. Chapter 11 of the Bankruptcy Code contains provisions for the handling of public companies in bankruptcy.
In 1970, the American Law Institute and the American Bar Association undertook the monumental task of drafting a Federal Securities Code to integrate the various pieces of previous legislation into a comprehensive federal law.
In 1980, after considerable efforts by a group of Consultants and Advisers, with Professor Louis Loss of the Harvard Law School as Reporter, the final draft of the Federal Securities Code was complete. However, Congress has yet to enact the Federal Securities Code.
The changes in technology and the Internet have created many opportunities in the area of securities regulation, but also have created many problems, especially in opportunities for fraud. As a result, the Securities and Exchange Commission has a section within the enforcement division monitoring the Internet for fraud.
THE INVESTORS ADVOCATE: HOW THE SEC PROTECTS INVESTORS AND MAINTAINS MARKET INTEGRITY, Securities and Exchange Commission (1999)
SEC v. COLT, Complaint, U.S.D.C. (D.D.C. March 2, 2000)
SEC v. FREEMAN, Complaint, U.S.D.C. (S.D.N.Y. March 14, 2000)
CHECKOSKY, Securities Exchange Act Release No. 34-38183 (January 21, 1997)
© 2000 Harry Stansbury
 See LUCIUS BEEBE, THE BIG SPENDERS 3-7 (1966); VINCENT P. CAROSSO, INVESTMENT BANKING IN AMERICA 32 (1970); RON CHERNOW, THE HOUSE OF MORGAN 24 (1990); ARCHIBALD COX, THE ROLE OF THE SUPREME COURT IN AMERICAN GOVERNMENT 31-34 (1976); MORTON J. HORWITZ, THE TRANSFORMATION OF AMERICAN LAW, 1780‑1860 211-12 (1977); 2 CHARLES WARREN, THE SUPREME COURT IN UNITED STATES HISTORY 408-10 & n.1 (1922); 2 CHARLES WARREN, HISTORY OF THE HARVARD LAW SCHOOL AND OF EARLY LEGAL CONDITIONS IN AMERICA 133-55 (1908). See generally William Power, Big Board, at Age 200, Scrambles to Protect Grip on Stock Market, Wall St. J., May 13, 1992, at A1; Union Pacific's Western Empire, Forbes, Mar. 1, 1967, at 34.
 See MORTON J. HORWITZ, THE TRANSFORMATION OF AMERICAN LAW, 1780-1860 111-14 (1977); MORTON J. HORWITZ, THE TRANSFORMATION OF AMERICAN LAW, 1870-1960 65-107 (1992); MARTIN MAYER, THE LAWYERS 311-14 (1966); ROY C. SMITH, THE MONEY WARS 19-20 (1990); JOEL SELIGMAN, THE TRANSFORMATION OF WALL STREET 42 (1982); Robert C. Clark, The Four Stages of Capitalism: Reflections on Investment Management Treatises, 94 Harv. L. Rev. 561, 562 & n.4 (1981); James T. Kloppenberg, The Theory and Practice of American Legal History, 106 Harv. L. Rev. 1332, 1341 (1993) (reviewing MORTON J. HORWITZ, THE TRANSFORMATION OF AMERICAN LAW, 1870-1960: THE CRISIS OF LEGAL ORTHODOXY (1992)); see also Mark J. Osiel, Lawyers as Monopolists, Aristocrats, and Entrepreneurs, 103 Harv. L. Rev. 2009, 2038 & nn.117-18 (1990) (reviewing LAWYERS IN SOCIETY (Richard L. Abel and Philip S.C. Lewis eds., 1988-1989)).
 See, e.g., VINCENT P. CAROSSO, INVESTMENT BANKING IN AMERICA 42-43 (1970); WILLIAM L. CARY, CORPORATIONS 1-6 (4th ed. unabridged 1969); ROY C. SMITH, THE MONEY WARS 24-25 (1990); Lucian A. Bebchuk, Federalism and the Corporation: The Desirable Limits on State Competition in Corporate Law, 105 Harv. L. Rev. 1435, 1442-44 (1992).
 See DETLEV F. VAGHTS, BASIC CORPORATION LAW 1-5 (2d ed. 1979).
 See RON CHERNOW, THE HOUSE OF MORGAN 23 (1990).
 See JOEL SELIGMAN, THE TRANSFORMATION OF WALL STREET 44-46 (1982).
 CARTER F. HENDERSON & ALBERT C. LASHER, 20 MILLION CARELESS CAPITALISTS 87-92 (1967); 1 LOUIS LOSS, SECURITIES REGULATION 27 (2d ed. 1961).
 See LOUIS LOSS, FUNDAMENTALS OF SECURITIES REGULATION 8 (2d ed. 1988); Joel Seligman, The Historical Need For a Corporate Disclosure System, in 1 SELECTED ARTICLES ON FEDERAL SECURITIES LAW 329, 344 (Franklin E. Gill ed., 1991); Note, Regulation of Nonissuer Transactions Under Federal and State Securities Registration Laws, 78 Harv. L. Rev. 1635, 1643 (1965).
 See 1 LOUIS LOSS & JOEL SELIGMAN, SECURITIES REGULATION 34 (3d ed. 1989).
 Merrick v. N.W. Halsey & Co., 242 U.S. 568 (1917); Caldwell v. Sioux Falls Stock Yards Co., 242 U.S. 559 (1917); Hall v. Geiger Jones Co., 242 U.S. 539 (1917).
 See Manning G. Warren III, Reflections on Dual Regulation of Securities: A Case Against Preemption, 25 B.C. L. Rev. 495, 496 (1984).
 See JOHN BROOKS, ONCE IN GOLCONDA 66‑85 (1969).
 See JOHN K. GALBRAITH, THE GREAT CRASH 1929 93‑132 (3d ed. 1972).
 See, e.g., WALTER K. EARLE, MR. SHEARMAN AND MR. STERLING AND HOW THEY GREW 238-42 (1963); JOSEPH C. GOULDEN, THE SUPERLAWYERS 153 (1971); J.A. LIVINGSTON, THE AMERICAN STOCKHOLDER 19-21 (1958); JOEL SELIGMAN, THE TRANSFORMATION OF WALL STREET 50‑72 (1982); 2 ROBERT T. SWAINE, THE CRAVATH FIRM AND ITS PREDECESSORS, 1819-1948 703-11 (1948); GORDON THOMAS & MAX MORGAN‑WITTS, THE DAY THE BUBBLE BURST 418-423 (1979); Robert C. Clark, The Four Stages of Capitalism: Reflections on Investment Management Treatises, 94 Harv. L. Rev. 561, 563 & n.6 (1981); Developments in the Law - Corporate Crime: Regulating Corporate Behavior Through Criminal Sanctions, 92 Harv. L. Rev. 1227, 1236 & nn.21-22 (1979). See generally Alfred S. Konefsky & John H. Schegel, Mirror, Mirror on the Wall: Histories of American Law Schools, 95 Harv. L. Rev. 833, 841 (1982).
 15 U.S.C. §§ 77a-77aa (1988).
 VINCENT P. CAROSSO, MORE THAN A CENTURY OF INVESTMENT BANKING 85 (1979).
 See RICHARD W. JENNINGS & HAROLD MARSH, JR., SECURITIES REGULATION 63‑65 (6th ed. 1987).
 15 U.S.C. §§ 78a-78ll (1988).
 See DAVID L. RATNER, SECURITIES REGULATION 827‑40 (3d ed. 1986).
 EDWARD T. MCCORMICK, UNDERSTANDING THE SECURITIES ACT AND THE S.E.C. 28‑37 (1948); JOEL SELIGMAN, THE HIGH CITADEL 69 (1978); Laura Nader, Enforcement Strategies and the Catch They Yield at the SEC, 99 Harv. L. Rev. 1362, 1364 (1986) (reviewing SUSAN C. SHAPIRIO, WAYWARD CAPITALISTS - TARGET OF THE SECURITIES AND EXCHANGE COMMISSION (1984)).
 15 U.S.C. §§ 79a-79z-6 (1988).
 15 U.S.C. §§ 77aaa-77bbbb (1988).
 15 U.S.C. §§ 80a-1 to -64 (1988).
 15 U.S.C. §§ 80b-1 to -21 (1988).
 15 U.S.C. §§ 78aaa-78lll (1988).
 11 U.S.C. §§ 1109, 1125, 1145 (1988).
 See Milton H. Cohen, "Truth in Securities" Revisited, 79 Harv. L. Rev. 1340, 1366‑406 (1966); Louis Loss & George A. Blackstone, Codification of the Federal Securities Laws, 28 Bus. Law. 381, 381‑91 (1973).
 FEDERAL SECURITIES CODE v-lvi (1980).
 See John C. Coffee, Jr., Brave New World?: The Impact(s) of the Internet on Modern Securities Regulation, 52 Bus. Law. 1195, 1195-1202 (1997); Alexander C. Gavis, The Offering and Distribution of Securities in Cyberspace: A Review of Regulatory and Industry Initiatives, 52 Bus. Law. 317, 317-325 (1996); Jane K. Winn, Regulating the Use of the Internet in Securities Markets, 54 Bus. Law. 443, 443-448 (1998).
 See Joseph J. Cella III & John R. Stark, SEC Enforcement and the Internet: Meeting the Challenge of the Next Millennium, 52 Bus. Law. 815, 815-821 (1997).