Discuss how the Internet affects the marketplace for securities
What will be an ideal response?
The Internet is now used daily to register securities. Online IPOs are a frequent occurrence that has brought efficiency (in economic terms) to the marketplace of securities. Small companies in particular use the Internet to avoid paying commissions to brokers or underwriters. Regulation A allows a simple method of registration.
In addition to using the Internet to provide information (for example, 10-K) to the SEC as required by the Securities Act of 1933 and The Securities Exchange Act of 1934, as well as others, potential investors receive information more rapidly and are willing to take advantage of this to purchase or sell securities. Online filing of many documents with the SEC is now routine for most large corporations, which benefit from the additional time given to them that did not exist when they had to use snail mail.
Furthermore, investors and companies can take advantage of the EDGAR database, which includes proxy statements, annual corporate reports, and a multitude of other documents that are filed with the commission. All of this allows the SEC to accomplish its goal of full disclosure.
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