By SIMON CONSTABLE
Wall Street isn’t what it used to be. It’s better for investors.
In large part, for that, we can thank the signing of the Securities Exchange Act in June 1934, creating the Securities and Exchange Commission.
“The old Wall Street was kind of corrupt in many ways with a lot of market manipulation,” says Richard Sylla, emeritus professor of economics and financial history at the Stern School of Business.
Significant changes introduced included limits on investing using borrowed money—which had been unfettered during the 1920s in the lead-up to the 1929 market crash that ushered in the Great Depression. The new laws also banned market manipulation.
But perhaps most important was the mandatory registration of all company annual and quarterly reports according to standard accounting rules.
Despite some grumbling over the new rules, things changed for the better. “Wall Street is considered a much fairer place than it was now,” Sylla says. “The world has benefited from the 1930s legislation.”
One of the most intriguing aspects of the law was President Franklin D. Roosevelt’s appointment of Joseph P. Kennedy, patriarch of the Kennedy family, as the first SEC chairman. Read original here.
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