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History of the Securities Commission
The earliest known government involvement into securities scams refer to the "Bubble Act" which was created
by the British Parliament in 1720. The act was an effort by the Parliament to stifle the scam involving the
South Sea Company [a government supported monopoly] which was attempting to pay off the national debt. As
soon as it became clear that the scam was working, other brokers began to collect on investments that were
also absolutely worthless. It seems that all one had to say to attract investors was, "I've got this
great idea for a business, but I have no way to finance it." Disclosure was not mandated. Legitimate
business could no longer use investing to gain finances because of widespread distrust of brokers. Something
had to be done. No new laws were enacted until the creation of the of the Companies Act of 1844, which was
the first to require the modern prospectus.
Blue Sky Laws
Blue Sky Laws were enacted to fight scams. America was facing a similar crisis as the agrarians in the
west were being sold securities worth nothing more than "lots of blue sky". Kansas was the first to enact
the "Blue Sky Laws" in 1911 and other states eventually followed. In 1929, the Uniform Sale of Securities
Act was adopted and later amended numerous times to incorporate sections which carry antifraud provisions,
regulate broker/dealers and investment advisors, and register securities. Thirty-six of the states, the
District of Columbia and Puerto Rico have adopted forms of the "Uniform Securities Act", with the rest
creating their own versions of "Blue Sky Laws". West Virginia adopted the act as Chapter 32 of the West
Virginia State Code and created the office of Commissioner of Securities in 1931 with the West Virginia
State Auditor as Commissioner Ex-officio.
Disclaimer
The West Virginia Securities Commission uses links to other Web sites for the convenience of the user. Whenever you
click on links provided, you are leaving the West Virginia Securities Commission and entering an external site. The
Security Commission cannot attest to the accuracy of the information provided by the external linked sites, nor does
the Securities Commission endorse any products or information obtained from these external sites.
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