Many question why securities law actually exists. After all, securities are a vague concept in finance and when individuals set out to start a business, there are often misunderstandings in how securities play a role in the structuring of a business and the legal ramifications of securities exchange. Securities themselves actually have no value. The value comes from the implications of securities in the assets that back them up. With assets and other financial components of value behind securities, owners and investors of securities are able to make claims of value based on what specifically is behind the securities in question.
In its simplest form, securities law is a way to protect investors against misleading or inaccurate information regarding the assets behind securities and to give investors a clear cut idea of what makes a given security valuable with legal clarification. Securities come in all forms: stocks, bonds, notes, collateral trust certificates, and so many more. With all of these options available to investors and prospective business owners, it can get quite confusing when trying to assess value to securities and making securities attractive for another party.
Securities are a large of capital raising, which is necessary for any business’s performance and longevity. Accumulating capital is often done with securities in mind and when a business gets to a point where it is ready to start courting investors, securities exchange becomes a main focus. Navigating through securities exchange and capital raising can be quite convoluted, and the legal process is prominent at every step of the way.