The Exchange Act 1934 is an often cited piece of legislation in many SEC filings. In a recent DEFA14A filing made by Willis Towers Watson (WLTW) on March 9, 2020 in relation to the proposed merger with AON (AON) the following definition of the Exchange Act was given,
“Exchange Act” means the United States Securities–Exchange&Act of 1934, as amended.
From the SEC website, the following definition is given
Securities Exchange Act of 1934
With this Act, Congress created the Securities and Exchange Commission. The Act empowers the SEC with broad authority over all aspects of the securities industry. This includes the power to register, regulate, and oversee brokerage firms, transfer agents, and clearing agencies as well as the nation’s securities self regulatory organizations (SROs). The various securities exchanges, such as the New York Stock Exchange, the NASDAQ Stock Market, and the Chicago Board of Options are SROs. The Financial Industry Regulatory Authority (FINRA) is also an SRO.
The Act also identifies and prohibits certain types of conduct in the markets and provides the Commission with disciplinary powers over regulated entities and persons associated with them.
The Act also empowers the SEC to require periodic reporting of information by companies with publicly traded securities.
This piece of legislation should not be confused with the Securities Act 1933. Often referred to as the “truth in securities” law. The full text of the act can be in a 366 page PDF document is available for download.
The Influence of the Act
The importance of the Exchange Act cannot be understated. Contained within are the rules that govern such areas as
- Corporate Reporting
- Insider Trading
- Registration of Exchanges, Associations, and Others
All of these topics have a huge influence over the conduct and procedures of how a takeover or merger can be performed. As such, they have been discussed at length on this website.
