What Securities Law Governs and When Companies Need Securities Counsel

What Securities Law Governs

Securities law in the United States is primarily governed by two foundational federal statutes: the Securities Act of 1933 and the Securities Exchange Act of 1934. The 1933 Act regulates the initial offering and sale of securities, requiring that companies provide investors with material information through registration statements filed with the Securities and Exchange Commission. The 1934 Act governs the secondary trading of securities, establishes the SEC as the primary regulatory body, and imposes ongoing reporting obligations on companies whose securities are registered under the Exchange Act.

Together, these statutes create a comprehensive disclosure regime designed to ensure that investors have access to the information they need to make informed investment decisions. The fundamental principle underlying securities regulation is disclosure, not merit: the SEC does not evaluate whether an investment is good or bad, but rather whether the company has provided full, fair, and accurate disclosure about its business, financial condition, risks, and management.

Beyond these two core statutes, securities regulation encompasses the Investment Company Act of 1940, the Investment Advisers Act of 1940, the Sarbanes-Oxley Act of 2002, the Dodd-Frank Wall Street Reform Act of 2010, and numerous SEC rules and regulations including Regulation D (private placement exemptions), Regulation A (small offering exemptions), Regulation S-K (non-financial disclosure requirements), and Regulation S-X (financial statement requirements). State securities laws, commonly known as Blue Sky laws, add an additional layer of regulatory compliance that varies by jurisdiction.

Issuer-Side vs. Investor-Side Securities Counsel

Securities law practice divides into two fundamentally different orientations. Investor-side counsel represents shareholders, institutional investors, and plaintiffs in securities fraud litigation. Issuer-side counsel represents the companies themselves, advising on how to meet registration, disclosure, and compliance obligations before enforcement issues arise.

Frederick M. Lehrer, P.A. is exclusively an issuer-side securities practice. This means the firm advises companies on how to comply with SEC requirements, prepare registration statements, draft periodic reports, structure private placements, and navigate the specific disclosure challenges created by operating in regulated industries such as cannabis, artificial intelligence, cryptocurrency, gaming, electric vehicles, entertainment, real estate, telecommunications, and luxury technology. The firm does not represent investors, bring securities fraud claims, or engage in class action litigation.

How SEC Disclosure Works in Practice

SEC disclosure is not a one-time event. When a company registers securities with the SEC, it enters into an ongoing relationship with the federal regulatory system that creates continuous obligations. Initial registration statements on Form S-1 or Form 10 must contain comprehensive disclosure about the company's business, financial condition, risk factors, management, related party transactions, and use of proceeds. Once registered, companies must file annual reports on Form 10-K, quarterly reports on Form 10-Q, and current reports on Form 8-K within specified deadlines.

The disclosure obligation is governed by the concept of materiality: information is material if there is a substantial likelihood that a reasonable investor would consider it important in making an investment decision. This standard applies not only to what is stated in filings, but also to what is omitted. A company can face enforcement liability for material misstatements (saying something false) or material omissions (failing to disclose something that should have been disclosed).

For companies in emerging industries, disclosure obligations are particularly complex. A cannabis company must disclose the federal illegality of its operations and the specific risks created by the tension between state legalization and federal prohibition. An AI company must disclose the limitations of its technology, the risks of algorithmic bias, and the regulatory uncertainty surrounding artificial intelligence. A cryptocurrency company must address whether its tokens constitute securities under the Howey test and the implications of evolving SEC enforcement postures toward digital assets.

Common Compliance Failures

The most common securities compliance failures are not the result of intentional fraud. They arise from insufficient attention to disclosure obligations, inadequate internal controls, and failure to update previously filed information when material changes occur. Late filings, incomplete risk factor disclosure, failure to report material events on Form 8-K, inadequate related party transaction disclosure, and inconsistencies between press releases and SEC filings are among the most frequent compliance failures that attract SEC scrutiny.

From an enforcement perspective, these failures create a paper trail that the SEC Division of Enforcement reviews when investigating potential violations. Former SEC enforcement attorneys understand exactly what the staff looks for when reviewing filings, which is why enforcement experience is directly relevant to compliance counseling. The patterns that trigger investigation are well-established, and competent securities counsel can identify and correct these patterns before they attract regulatory attention.

When Companies Need Securities Counsel

Companies typically need specialized securities counsel at several critical junctures: when raising capital through public or private offerings, when preparing to go public through an IPO or reverse merger, when responding to SEC comment letters or enforcement inquiries, when navigating industry-specific disclosure challenges, and when managing ongoing periodic reporting obligations. The cost of failing to engage qualified securities counsel at these junctures is almost always greater than the cost of the counsel itself, because disclosure failures compound over every subsequent reporting period.

Frederick M. Lehrer brings over 30 years of securities law experience to these engagements, including service as a Staff Attorney in the SEC Division of Enforcement and as a Special Assistant United States Attorney in the Southern District of Florida. This enforcement background provides a perspective on compliance counseling that purely private-practice attorneys cannot replicate: understanding not just what the rules require, but how the enforcement staff applies those rules when reviewing filings and deciding whether to open investigations.