What was the purpose of the Security Exchange Act of 1934?

The Securities Exchange Act of 1934 (also called the Exchange Act, '34 Act, or 1934 Act) (Pub. L. 73–291, 48 Stat. 881, enacted June 6, 1934, codified at 15 U.S.C. § 78a et seq.) is a law governing the secondary trading of securities (stocks, bonds, and debentures) in the United States of America.[1] A landmark of wide-ranging legislation, the Act of '34 and related statutes form the basis of regulation of the financial markets and their participants in the United States. The 1934 Act also established the Securities and Exchange Commission (SEC),[2] the agency primarily responsible for enforcement of United States federal securities law.

Companies raise billions of dollars by issuing securities in what is known as the primary market. Contrasted with the Securities Act of 1933, which regulates these original issues, the Securities Exchange Act of 1934 regulates the secondary trading of those securities between persons often unrelated to the issuer, frequently through brokers or dealers. Trillions of dollars are made and lost each year through trading in the secondary market.

The purpose of the Security Exchange Act (SEA) of 1934 in the United States was to regulate the secondary trading market of securities like stocks and bonds between persons unrelated to the issuer.  This act also created the Securities and Exchange commission (SEC) that enforces United States federal securities law.