Securities and Exchange Commission

The Securities and Exchange Commission (SEC) is an independent federal government regulatory agency responsible for protecting investors, maintaining fair, orderly, and efficient markets, and facilitating capital formation in the United States. Here are some key points about the SEC:

• Establishment: The SEC was created in 1934 by the Securities Exchange Act of 1934, following the stock market crash of 1929 and during the Great Depression. Its formation was part of President Franklin D. Roosevelt's New Deal reforms to restore confidence in the financial markets.
• Purpose: The primary mission of the SEC is to protect investors, maintain fair, orderly, and efficient markets, and facilitate capital formation. It achieves this by:
  • Requiring public companies to disclose meaningful financial and other information to the public.
  • Overseeing securities markets to prevent fraud, manipulation, and insider trading.
  • Regulating investment advisors and mutual funds.
  • Enforcing federal securities laws.
• Structure: The SEC is headed by five Commissioners who are appointed by the President and confirmed by the Senate. No more than three Commissioners can be from the same political party. The Commissioners oversee the work of the SEC, which is divided into several divisions including:
  • Division of Corporation Finance
  • Division of Enforcement
  • Division of Investment Management
  • Division of Economic and Risk Analysis
  • Division of Trading and Markets
• Key Legislation:
  • Securities Act of 1933 - Requires that investors receive financial and other significant information concerning securities being offered for public sale.
  • Investment Advisers Act of 1940 - Regulates investment advisers.
  • Investment Company Act of 1940 - Regulates mutual funds and other investment companies.
  • Sarbanes-Oxley Act - Enacted in 2002, it introduced major changes to the regulation of corporate governance and financial practice.
  • Dodd-Frank Wall Street Reform and Consumer Protection Act - Passed in 2010, it made comprehensive changes to financial regulation, significantly impacting the SEC's responsibilities.
• Notable Enforcement: The SEC has the authority to bring civil enforcement actions against individuals or companies alleged to have committed accounting fraud, provided false or misleading information, or engaged in insider trading or other violations of securities law.
• Public Access: The SEC maintains the EDGAR (Electronic Data Gathering, Analysis, and Retrieval) system, which provides access to company filings, annual reports (Form 10-K), quarterly reports (Form 10-Q), and other required disclosures.

Sources:

• www.sec.gov
• Investopedia: SEC
• U.S. House of Representatives: History, Art & Archives
• History.com: Securities and Exchange Commission

Related Topics:

• Financial Industry Regulatory Authority
• Commodity Futures Trading Commission
• Federal Reserve System
• Public Company Accounting Oversight Board