Registration of securities by filing corporate information before issuing securities may be required under both federal and state law. Blue sky laws require that corporations advertising and selling shares to the public must get approval from the state corporations commissioner and/or the Securities and Exchange Commission after providing details on financing and management. These laws are designed to proptect purchasers from buying fraudulent or worthless stock.
The first of the federal securities laws enacted was the Federal Securities Act of 1933, which regulates the public offering and sale of securities in interstate commerce. Under the 1933 Act, the offer or sale of a security must be registered with the Securities Exchange Commission and certain information must be disclosed to the prospective security's purchaser. The registration statement is a detailed report to be filed with the Securities and Exchange Commission by a corporation making an issuance of shares to be advertised and sold to the general public in interstate commerce, which must be approved by the SEC before it will approve the stock issuance.
