Pursuant to the Securities Act: Overview, definition, and example
What is pursuant to the Securities Act?
Pursuant to the Securities Act refers to actions, obligations, or disclosures that are taken in accordance with the U.S. Securities Act of 1933. This federal law governs the offer and sale of securities and aims to protect investors through mandatory disclosures and anti-fraud provisions. When a contract or filing states that something is done “pursuant to the Securities Act,” it means the action complies with, or is required by, that law.
Why is pursuant to the Securities Act important?
This phrase is important because it signals legal compliance with a foundational federal securities law. The Securities Act requires companies to register securities with the SEC unless an exemption applies, and it imposes liability for misleading statements or omissions in public offerings. Including this phrase in contracts, offering documents, or legal disclaimers confirms that the relevant activity—such as issuing stock, filing a registration statement, or delivering a prospectus—is being carried out under the appropriate legal authority.
Understanding pursuant to the Securities Act through an example
A startup raises capital by issuing preferred stock to investors. To comply with federal law, it either registers the offering or claims an exemption (such as Regulation D) pursuant to the Securities Act. The subscription agreement may state that the offering is being made “pursuant to the Securities Act of 1933, as amended,” which helps establish that the transaction falls under the statute’s scope and follows its rules.
Example of how a pursuant to the Securities Act clause may appear in a contract
Here’s how a pursuant to the Securities Act clause may appear in a securities purchase agreement:
"The Securities being offered and sold pursuant to this Agreement have not been registered under the Securities Act of 1933, as amended, and are being offered and sold in reliance on an exemption therefrom."
Conclusion
The phrase pursuant to the Securities Act connects contractual or regulatory actions to the legal framework established by the Securities Act of 1933. It helps affirm that securities-related activities—such as sales, filings, or disclosures—are being conducted under the proper legal authority. Using this language correctly in contracts and offering materials is essential for demonstrating compliance and managing regulatory risk.
This article contains general legal information and does not contain legal advice. Cobrief is not a law firm or a substitute for an attorney or law firm. The law is complex and changes often. For legal advice, please ask a lawyer.