Jonah Patel
The Securities and Exchange Commission (SEC) is an independent federal agency of the United States government. It was created in 1934 in response to the Great Depression and the 1929 stock market crash. The SEC's authority was established by the Securities Act of 1933 and the Securities Exchange Act of 1934, both considered parts of Franklin D. Roosevelt's New Deal program. The SEC is the federal agency that oversees investment offerings and financial markets, with a three-part mission: to protect investors, maintain fair and orderly markets, and facilitate capital formation.
| Characteristics | Values |
|---|---|
| Type of Agency | Independent federal agency |
| Date Created | 1934 |
| Purpose | To enforce laws against market manipulation |
| Authority | Established by the Securities Act of 1933 and the Securities Exchange Act of 1934 |
| Mission | To protect investors, maintain fair and efficient markets, and facilitate capital formation |
| Enforcement | Enforces statutory requirement that public companies submit annual reports and other periodic disclosures |
| Entities Under Authority | Securities exchanges, securities brokers and dealers, investment advisors, mutual funds, and other market participants |
| Number of Commissioners | Five |
| Appointing Authority | President of the United States |
| Term Length | Five years |
| Term Expiry | Staggered, with one commissioner's term ending on June 5 each year |
| Continuation Beyond Term Expiry | Service may continue up to eighteen additional months |
| Office Divisions | Office of Compliance, Inspections and Examinations; Office of International Affairs; Office of Information Technology; Office of Investor Education and Advocacy |
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What You'll Learn
The SEC's authority
The United States Securities and Exchange Commission (SEC) is an independent agency of the United States federal government. It was created in the aftermath of the 1929 Wall Street crash and the Great Depression to enforce laws against market manipulation and to protect investors.
Entities under the SEC's authority include securities exchanges with physical trading floors, such as the New York Stock Exchange, self-regulatory organizations, the Municipal Securities Rulemaking Board, NASDAQ, alternative trading systems, and any other persons or entities engaged in transactions for the accounts of others. The SEC has six divisions, including Corporation Finance, which oversees public company disclosures and the registration of transactions, and the Trading and Markets division, which oversees self-regulatory organizations, broker-dealer firms, and investment houses.
The SEC enforces the statutory requirement that public companies and other regulated entities submit quarterly and annual reports, as well as other periodic disclosures. It can bring civil actions in U.S. District Courts or initiate administrative proceedings heard by independent administrative law judges. The SEC does not have criminal authority but may refer matters to state and federal prosecutors.
The SEC's mission is threefold: to protect investors, maintain fair, orderly, and efficient markets, and facilitate capital formation. To this end, it works with various self-regulatory organizations, federal agencies, state securities regulators, international securities agencies, and law enforcement agencies. The SEC also operates a Small Business Capital Formation Advisory Committee, which addresses rules and regulations affecting small and emerging businesses and their investors under federal securities laws.
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The SEC's mission
The US Securities and Exchange Commission (SEC) is an independent agency of the US federal government, created in the aftermath of the 1929 Wall Street crash and the subsequent Great Depression. The SEC's authority was established by the Securities Act of 1933 and the Securities Exchange Act of 1934, both part of Franklin D. Roosevelt's New Deal program.
To achieve its mandate, the SEC enforces the requirement that public companies and other regulated entities submit quarterly and annual reports, as well as other periodic disclosures. Company executives must also provide a narrative account, called the "management discussion and analysis" (MD&A), that outlines the previous year of operations. The SEC oversees securities exchanges, securities brokers and dealers, investment advisors, and mutual funds to promote fair dealing, the disclosure of important market information, and to prevent fraud.
The SEC's Office of Investor Education and Advocacy unveiled an anti-fraud public service campaign, warning investors about the impact of investment scams on their financial future. The SEC also has an Economic and Risk Analysis Division (DERA), which acts as the agency's "think tank", integrating financial economics and data analytics into the SEC's core mission.
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The SEC's offices
The United States Securities and Exchange Commission (SEC) is an independent agency of the United States federal government. It was created in the aftermath of the 1929 Wall Street crash to enforce laws against market manipulation. The SEC has a three-part mission: to protect investors, maintain fair, orderly, and efficient markets, and facilitate capital formation.
The SEC has several offices, each with its own specific responsibilities and functions, which include:
The Office of Compliance, Inspections, and Examinations
This office is responsible for inspecting broker-dealers, stock exchanges, credit rating agencies, registered investment companies, mutual funds, and Registered Investment Advisors. They ensure compliance with regulations and protect investors' interests.
The Office of International Affairs
The Office of International Affairs represents the SEC abroad. It negotiates international enforcement information-sharing agreements and develops the SEC's international regulatory policies. This office also helps set international regulatory standards through organisations like the International Organization of Securities Commissions and the Financial Stability Forum.
The Office of Information Technology
The Office of Information Technology provides IT support to the commission and its staff, including application development and infrastructure operations.
The Division of Examinations
The Division of Examinations, or DERA, creates analytic programs to detect patterns and identify risks. It houses the commission's chief economist and conducts the SEC's National Exam Program. The division's mission includes protecting investors, ensuring market integrity, and supporting responsible capital formation through risk-focused strategies.
The Office of the Whistleblower
The SEC's Office of the Whistleblower provides a platform for individuals to report possible securities law violations. This office was created by the Dodd-Frank Wall Street Reform and Consumer Protection Act, which amended the Securities Exchange Act of 1934.
Regional Offices
The SEC also has 11 regional offices throughout the United States, each with its own director. These offices are located in major cities like Boston, New York, Philadelphia, and Los Angeles, ensuring a local presence for the SEC's operations and enforcement activities.
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The SEC's commissioners
The US Securities and Exchange Commission (SEC) is an independent agency of the US federal government. It was created in the aftermath of the 1929 Wall Street crash to enforce laws against market manipulation. The SEC has a three-part mission: to protect investors, maintain fair, orderly, and efficient markets, and facilitate capital formation.
The SEC's authority was established by the Securities Act of 1933 and the Securities Exchange Act of 1934, both part of Franklin D. Roosevelt's New Deal program. The five SEC commissioners are appointed by the US president, with no more than three commissioners belonging to the same political party. Their terms last five years and are staggered, with one commissioner's term ending on June 5 each year. The president designates one of the commissioners as chairman, the SEC's top executive. Service may continue up to eighteen months past term expiration.
The first chairman of the SEC was Joseph P. Kennedy, a self-made multimillionaire, financier, and leader in the Irish-American community. Kennedy was a close friend of Roosevelt, who chose him partly based on his experience on Wall Street. Kennedy's team defined four missions for the new commission:
- To restore investor confidence in the securities market, which had practically collapsed.
- To restore integrity to securities markets by prosecuting and eliminating fraudulent and unsound practices targeting investors.
- To end million-dollar insider trading by top officials of major corporations.
- To establish a complex and universal system of registration for securities sold in America, with a clear set of deadlines, rules, and guidelines.
Later SEC commissioners and chairmen include William O. Douglas, Jerome Frank, and William J. Casey.
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The SEC's history
The US Securities and Exchange Commission (SEC) is an independent agency of the US federal government. It was created in the aftermath of the 1929 Wall Street crash to enforce laws against market manipulation.
The SEC's authority was established by the Securities Act of 1933 and the Securities Exchange Act of 1934. Both laws are considered parts of Franklin D. Roosevelt's New Deal program. The 1933 Act federally regulates original issues of securities across state lines, requiring issuing companies to register distributions before the sale so that investors can access basic financial information and make informed decisions. The 1934 Act regulates secondary trading between individuals and companies unrelated to the original issuers of securities.
In its first year of operation, the SEC had over 2300 cases under investigation, obtaining injunctions against 79 defendants and restraining orders against 19 for "fraudulent and illegal activities" violating the 1933 and 1934 Acts. By 1940, nearly all investigations of stock frauds and violations of the 1934 Act were conducted in the first instance from the SEC's regional offices.
The SEC has a three-part mission: to protect investors, maintain fair, orderly, and efficient markets, and facilitate capital formation. To achieve this, the SEC enforces the statutory requirement that public companies and other regulated entities submit quarterly and annual reports, as well as other periodic disclosures.
The SEC's first chairman, appointed by Roosevelt in 1934, was Joseph P. Kennedy, a self-made multimillionaire, financier, and leader among the Irish-American community. Later SEC chairmen include William J. Casey, who took office in 1971, and William O. Douglas.
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Frequently asked questions
The SEC is an independent federal agency that regulates the U.S. securities markets and protects investors.
The SEC was created in 1934 in response to the Great Depression and the 1929 stock market crash.
The SEC oversees organisations and individuals in the securities markets, including securities exchanges, broker-dealers, investment advisors, and investment funds. It promotes fair dealing, transparency, and protection against fraud.
The SEC is headed by a five-member commission, composed of the chair and four commissioners appointed by the U.S. president and confirmed by the Senate. Notable past commissioners include William O. Douglas, Jerome Frank, and William J. Casey.
The SEC enforces laws and regulations related to securities, such as the Securities Act of 1933 and the Securities Exchange Act of 1934. It also brings civil actions against those accused of breaking securities laws and refers criminal cases to the U.S. Department of Justice.
