SEC

Securities and Exchange Commission

A federal government agency in the United States responsible for regulating the securities industry, including stock and options exchanges, and enforcing federal securities laws. Its primary mission is to protect investors, maintain fair, orderly, and efficient markets, and facilitate capital formation. Key points about the SEC:

• Establishment: The Securities Exchange Act of 1934 created the SEC to restore investor confidence in the capital markets following the 1929 stock market crash and the Great Depression.
• Responsibilities: The SEC’s main responsibilities include:
  • Overseeing key participants in the securities industry, including securities exchanges, broker-dealers, investment advisors, mutual funds, and public companies
  • Requiring public companies to disclose meaningful financial and other information to the public
  • Enforcing federal securities laws and investigating and prosecuting violations, such as insider trading, accounting fraud, and providing false or misleading information about securities
  • Proposing and adopting rules and regulations that govern the securities industry
• Organization: The SEC is led by five presidentially appointed Commissioners, including a Chair, who serve staggered five-year terms. The agency is organized into five main divisions and several offices, each with specific responsibilities.
• Disclosure: The SEC requires public companies to file periodic reports, such as annual reports (Form 10-K) and quarterly reports (Form 10-Q), to ensure that investors can access reliable and timely information about the companies they invest in.
• Enforcement: The SEC has broad enforcement powers to investigate potential violations of securities laws and to bring civil enforcement actions against individuals and companies found to have violated these laws.
• Oversight: The SEC oversees self-regulatory organizations (SROs), such as the Financial Industry Regulatory Authority (FINRA) and the Public Company Accounting Oversight Board (PCAOB), which have regulatory responsibilities in their respective areas of expertise.

The SEC plays a vital role in maintaining the integrity of the U.S. securities markets, protecting investors, and promoting the stability and efficiency of the financial system.

• Abbreviation: SEC