Securities Law: Why it Matters for Your Business

You may be asking yourself what the big deal is with securities law and how it applies to your business. In a nutshell, there are several regulations that govern how and what avenues you can take in order to raise capital for your business. In order to stay compliant with all of these laws and regulations, you need to have an understanding of how it applies to your company. Here are some of the reasons that securities law matters to you.

 

Consumer Protection

These regulations were created with the consumer in mind. They are supposed to serve in the protection of consumers from pyramid schemes and other types of scams. You have to prove that you’re raising capital for a legitimate purpose, and provide assures to your investors of what this means for them. A misleading claim can be used against you to establish fines and other liabilities in the protection of the consumer or your investor.

 

Prevention of Fraud

Going along with this theme is the prevention of fraud and stopping manipulative practices in the marketplace. There are laws that state that in order to sell security, either debt or equity, in your company that you need to register it first. This ensures that the money generated won’t be misused for some nefarious purpose. You’re required to have disclosure statements. Use a securities law attorney to help you draft the necessary paperwork for your investors.

 

SEC Registration of Businesses

The Securities and Exchange Commission (SEC) is the governing body that regulates these exchanges of capital investment. Even small businesses may be required to register with the SEC unless they meet certain exemption criteria. There are some many nuances that you may need an attorney to help you through the process.

 

Compliance with Capital Ventures

If you fail to meet the compliance standards, your company could face stiff penalties. Many of the regulations are about how you disclose information to your investors. Some of these penalties could be the loss of your business license, heavy fines, or even jail time. It’s important that you understand the rules when it comes to raising capital for your business ventures.

 

You don’t want to find out that you’ve violated regulations that are required by the SEC. This can spell disaster for the future of your company. Ask for legal advice so that you can navigate this complicated landscape with ease. Know the laws before you start generating funds for your next business venture.