SEC Registration and Exemption

The Securities and Exchange Commission requires that companies disclose important financial information through the registration of securities. However, there are exemptions to this requirement that allow some types of offerings without the need of registration.

In order to allow investors to make informed judgments about buying or selling securities, the SEC requires that important financial information be divulged through registration. In this way, companies are unable to lie to investors about the state of the business. The information provided through registration includes description of company’s property and business, security to be offered for sale, management, and financial statements. However, not all offerings need to be registered. Some of the exemptions include: private offerings to a limited number of entities, intrastate offerings, and securities of municipal, state and federal governments. While there are always problems with companies releasing false information, requiring the registration of securities helps investors gain valuable information before making important decisions.

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