It requires every offer or sale of securities that uses the means and instrumentalities of interstate commerce to be registered with the SEC pursuant to the 1933 Act, unless an exemption from registration exists under the law.

[7] The 1933 Act is based upon a philosophy of disclosure, meaning that the goal of the law is to require issuers to fully disclose all material information that a reasonable shareholder would need in order to make up his or her mind about the potential investment.

[further explanation needed] Part of the New Deal, the Act was drafted by Benjamin V. Cohen, Thomas Corcoran, and James M. Landis, and signed into law by President Franklin D.

Unlike state blue sky laws, which impose merit reviews, the '33 Act embraces a disclosure philosophy, meaning that in theory, it is not illegal to sell a bad investment, as long as all the facts are accurately disclosed.

This extremely high level of liability exposure drives an enormous effort, known as "due diligence", to ensure that the document is complete and accurate.

[10] Unless they qualify for an exemption, securities offered or sold to a United States Person must be registered by filing a registration statement with the SEC.

Rule 144, promulgated by the SEC under the 1933 Act, permits, under limited circumstances, the public resale of restricted and controlled securities without registration.

[15] In addition to restrictions on the minimum length of time for which such securities must be held and the maximum volume permitted to be sold, the issuer must agree to the sale.

The amount of securities sold during any subsequent three-month period generally does not exceed any of the following limitations: Notice of resale is provided to the SEC if the amount of securities sold in reliance on Rule 144 in any three-month period exceeds 5,000 shares or if they have an aggregate sales price in excess of $50,000.

[18] Regulation S is a "safe harbor" that defines when an offering of securities is deemed to be executed in another country and therefore not be subject to the registration requirement under Section 5 of the 1933 Act.

Violation of the registration requirements can lead to near-strict civil liability for the issuer, underwriters, directors, officers, and accountants under §§ 11, 12(a)(1), or 12(a)(2) of the 1933 Act.

[21]: 4 To have "standing" to sue under Section 11 of the 1933 Act, such as in a class action, a plaintiff must be able to prove that he can "trace" his shares to the registration statement in question, as to which there is an alleged material misstatement or omission.

[22][23][24] In the absence of the plaintiff having an ability to actually trace his shares to the allegedly defective registration statement, such as when securities issued at multiple times -- and not all under the same registration statement which contains the alleged defect -- are held together by the Depository Trust Company in its nominee name in a fungible bulk, the plaintiff may be barred from pursuing his claim for lack of standing.