The federal law governing initial securities offerings is the Securities Act of 1933 (1933 Act), which is administered by the Securities and Exchange Commission (SEC). The 1933 Act seeks to: 

(1) Ensure full disclosure of all material facts about the investment opportunity to offerees before they invest.

(2) Eliminate fraudulent conduct in the markets. Note that a securities offering that passes muster under the federal securities law is not being approved by the government as a good investment. To promote full disclosure, the 1933 Act forbids any interstate offering of a new security until a registration statement has been filed with, and approved by, the SEC. 

Questions 

1. Describe the information contained in a registration statement under the 1933 Act. 

2. Explain the role played by the prospectus in the registration process. 

3. Describe the three primary financial statements. Explain why are they audited.