Speculative investments fueled our current “Great Recession” much as they did the Great Depression that started with the Stock Market crash of 1929. Legitimate companies suffered along with the more questionable ones, and as a result of the bitter experience, Congress passed the Securities Act to curb future speculation of the kind that brought down the markets.

On this day, June 6, in 1933, Congress passed the Securities act, mandating registration of  “any means or instruments of transportation or communication in interstate commerce.” Meaning that unless they have certain exemptions, companies selling securities or stock must be registered with the SEC.

The financial industry predicted the worst, including a strike by financiers unwilling to operate in the restrictive environment. Unlike the past “blue sky” laws which required no disclosure and a higher threshold for proving fraud, the Securities Act set a clear legal basis for any court action against companies. Instead of a strike, the perceived higher security of American stocks attracted investors from the world over, boosting businesses and providing the standard for similar laws in Europe.