Securities and Exchange Commission (SEC)

Overview

The Securities and Exchange Commission (SEC) is an independent federal government regulatory agency in the United States. It was established by Congress in 1934 to help restore investor confidence in the U.S. capital markets during the Great Depression.

Key Concepts

The SEC’s primary mission is to:

• Protect investors.
• Maintain fair, orderly, and efficient markets.
• Facilitate capital formation.

Deep Dive

The SEC oversees key participants in the securities world, including securities exchanges, brokers and dealers, investment advisors, and mutual funds. It requires public companies to disclose meaningful financial and other information to the public, enabling investors to make informed investment decisions.

Applications

The SEC’s regulations cover a wide range of financial activities, including:

• Initial Public Offerings (IPOs).
• Mergers and acquisitions.
• Trading of stocks, bonds, and other securities.
• Enforcement of federal securities laws.

Challenges & Misconceptions

A common misconception is that the SEC guarantees investments or prevents all fraud. While the SEC works to prevent fraud, it cannot eliminate it entirely. It also does not approve or disapprove of securities offerings, as this is the issuer’s responsibility.

FAQs

What is the main role of the SEC?

The SEC’s main role is to enforce federal securities laws, regulate the securities industry, and protect investors.

Who does the SEC protect?

The SEC protects the investing public, including individual and institutional investors.