A more thorough explanation:

Definition: The Exchange Act is a federal law that regulates the trading of securities in the United States. It was passed in 1934 and is also known as the Securities Exchange Act of 1934. The law requires companies to disclose certain financial information to the public and to register with the Securities and Exchange Commission (SEC) if they have more than a certain number of shareholders.

Example: Let's say you want to buy stock in a company. Before you invest your money, you want to know how the company is doing financially. The Exchange Act requires the company to provide you with certain financial information, such as its annual report and quarterly earnings statements. This information can help you make an informed decision about whether to invest in the company.

Another example: The Exchange Act also requires companies to register with the SEC if they have more than 500 shareholders and assets of more than $10 million. This helps ensure that companies are following the law and that investors have access to important information about the company.

Explanation: The Exchange Act is designed to protect investors and ensure that companies are transparent about their financial health. By requiring companies to disclose certain financial information and register with the SEC, the law helps investors make informed decisions about where to invest their money. The examples illustrate how the law works in practice, by requiring companies to provide financial information to investors and ensuring that companies are following the law by registering with the SEC.