Trust Indenture Act of 1939

This Federal Act requires any bond issue over $5,000,000 have an indenture before being offered to the public.

An indenture is the laundry list of details about the bond, such as coupon, maturity date, collateral, mother's maiden name, and so on. "The Trust" in the act refers to the requirement that the issuer hire an independent trustee who acts on behalf of the bondholders.

The same writer who misread the moral obligation bond messed this one up as well. Sorry, 1-800-Fixodent. Okay, so arguably the most boring act of all time - even more boring than the third act of Henry IV, Part 2 - a total snoozefest, the Trust Indenture Act basically extended the set of laws trying to make financial dealings more fair and square for the little guy, the average Joe, the Joneses.

Specifically, this act focused on trusts, i.e. legal entities set up to manage and allocate money in the event that life…changes. You die; you have kids; you get married; you get divorced; you turn into a zombie...yeah. All of those.

So the TIA does a couple of things:

First, there’s the “indenture” part. An indenture is a written agreement - a legal contract, more or less. The Act made it illegal for bonds of $5M+ to be offered without one of these protective docs, and it had to disclose everything up front, so an unwitting bondholder wouldn’t suddenly be shocked to discover that their bond ceased to hold value after the third waning moon following the winter solstice...or whatever other clever catches the issuer decided to throw in there.

And then there’s the “Trust” part. The Act also made it a requirement for there to be a trustee appointed any time a bond is issued, someone whose job it was to make semi-annual disclosures of any relevant info related to the bond. So yeah, by putting these safeguards in place, the little guy, uh, wouldn’t get stepped on.