Discuss some of the risks involved in the public offering and how the securities laws deal with them.

Legal and financial risks are both involved in a public offer. There is a risk that there will be fraud, or misrepresentation due to the lack of supervision in the process. Also, insider trading may occur if executives try to profit from information not made available to the public. Financially, depending on the current market situation, investment may be unable to produce returns or will lose their value.

Sarbanes-Oxley Act, for example, is a securities law that limits insider trades and also requires the disclosure of specific information about an organization – financial reports. This helps protect investors by providing them with access to accurate info regarding a firm’s performance/stability prior to investing their funds.

Most importantly, although no system is perfect, several steps are taken to lower the legal and financial risks of going public. All parties must adhere to the regulations in this industry, both for investors’ safety and fair dealing.