The Regulator's Perspective on Corporate Fraud
Kay P. Kindred and Ronald R. Sims
Over the years, acts of Congress and the rules of the Securities and Exchange Commission (SEC) have attempted to establish a regulatory environment for business conduct. This chapter will focus on such efforts and discuss how acts of Congress and the rules of the SEC largely determine the regulatory environment in the United States. It will specifically address the Securities Act of 1933, the Securities Exchange Act of 1934, the Foreign Corrupt Practices Act of 1977, the Racketeering Influenced Corrupt Organizations Act of 1970, and the federal money laundering statutes and their roles in deterring fraud and enforcing regulatory requirements. The chapter will also describe how such legislation influences the practices of accountants, who have gained an increasingly responsible role in business and who, as a result, have become prime targets for government and professional regulation and lawsuits involving such things as auditing and nonauditing functions.
The Securities Act of 1933 (hereafter, the 1933 Act), also called the "Truth in Securities Act," requires that all securities, unless exempted by statute, be registered with the SEC before being sold to the public so that