In the wake of the financial crisis of 2009, Bernie Madoff’s investment scandal and other recent white-collar crimes, securities law has become a specialization of particular interest to many legal professionals.
Securities law initially developed in response to another financial crisis—the far greater calamity of the market collapse in 1929. As part of Franklin Delano Roosevelt’s “New Deal,” Congress enacted the Securities Act of 1933 as well as the Securities Exchange Act of 1934, which created the Securities and Exchange Commission (the “SEC”). Prior to the 1933 and 1934 Acts, state laws governed securities in what are known as “blue sky laws.” These state laws remain applicable in certain situations in which a security remains exempt from the federal laws.
Securities attorneys represent clients with respect to stocks, mutual funds, bonds, and other financial instruments. This work is primarily divided into three broad areas—transactional practice, regulatory practice and litigation.
Transactional work entails managing the legal technicalities of initial public offerings, secondary offerings, mergers and acquisitions and private sale of securities. Issuances of stock or other securities are used to finance business throughout the globe. Transactional attorneys facilitate these operations on behalf of their clients, ranging from large corporations to individual investors. Securities attorneys often work closely with tax specialists in structuring these transactions.
While transactional attorneys revel in the glory of “the deal,” the regulatory aspect of the practice maintains the integrity of the transactions. At its heart, the 1933 Act ensures disclosure of important financial information. Attorneys specializing in regulatory work enable companies, and certain individuals, to disclose the appropriate information in a timely manner. These regulations are enforced by not only the SEC, but also other regulatory agencies, including the Office of the Comptroller of the Currency, National Association of Securities Dealers, New York Stock Exchange and NASDAQ. Securities attorneys frequently rely on paralegals to aid in filing the copious paperwork involved in regulatory work.
If companies run afoul of the regulations, securities litigators then become the central players. Securities litigators work in both civil and criminal arenas, as they litigate civil suits as well as civil or criminal enforcement actions. For example, securities attorneys may represent a corporation' s shareholders in a securities fraud lawsuit against the corporation' s officers and directors, or they may assist clients in matters involving the breach of SEC regulations.
A legal education is, of course, essential to becoming a securities attorney. While a Juris Doctorate degree is required, a background in finance or accounting is also crucial in a securities attorney’s development.
In addition to having excellent writing skills, securities attorneys must be able to read and understand financial data.