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S. 3420, A Bill to provide for the regulation of securities exchanges (Federal Securities Exchange Act of 1934), April 17, 1934

Revelations of the Senate investigation of banks and brokerages prompted Congress to pass new regulatory legislation even before the Pecora Committee released its final report in June 1934. Following the Banking Act of 1933, the Federal Securities Exchange Act of 1934 protected investors from fraud, prohibited insider trading, and established the Securities and Exchange Commission.

Records of the U.S. Senate, National Archives and Records Administration

S. 3420, A Bill to provide for the regulation of securities exchanges (Federal Securities Exchange Act of 1934), April 17, 1934

The 1929 Stock Market Crash

The 1929 New York stock market crash reverberated throughout the nation, propelling the economic collapse that resulted in the Great Depression. To understand the cause of the financial crash, the Senate Committee on Banking and Currency investigated the market practices of Wall Street financiers and financial institutions. Informally named after its astute and dynamic chief counsel, Ferdinand Pecora, the Pecora Committee exposed wrongdoing and recovered millions of dollars in unpaid taxes. Congress drew on the committee’s discoveries to legislate regulations that would guide the economy for decades to come.

[Financial lobbyists] are powerful, but they are not powerful enough to defy Congress. They are strong, but they are not strong enough to obstruct the Government. At least that is my hope.

Senator Duncan Fletcher of Florida, Speech to the Senate, May 7, 1934