What laws regulate a broker’s conduct ?
There are three primary sources of law that regulate a broker’s conduct: federal, state, and the rules of self-regulatory organizations. Federal securities laws arise out of the Securities Act of 1933 and the Securities Exchange Act of 1934, enacted in response to the abuses of the 1920’s, as well as the Investment Advisors and Investment Company Acts, enacted in 1940, and the rules the SEC has enacted under these statutes. Rule 10b-5, under the 1934 Act, which prohibits a wide variety of fraudulent practices, is perhaps the best known law. These acts have been amended a number of times, mostly in recent years to the detriment of investors. There were a series of amendments in the 1990’s pushed by Senator Phil Gramm, a scourge of the investing public now mercifully retired, but the pendulum somewhat swung the other way in 2002 with the Sarbanes-Oxley Act, a response to the widespread corruption on Wall Street that became apparent after the bubble burst in 2000. Because federal law has
