• May 2019
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Securities and Exchange Commission (SEC)

An independent, non-partisan government agency established to promote transparency, regulate securities markets and protect investors from fraud and other manipulative financial practices. The agency also monitors corporate takeovers.

 

In the wake of the great stock market crash of 1929, the U.S. government was faced with the reality that the markets were underregulated and the whole of society was paying dearly as a result. So, as part of the New Deal, Congress passed the Securities Exchange Act of 1934 and Franklin D. Roosevelt signed it into law. The most significant legacy of this legislation is the U.S. Securities and Exchange Commission, which the law established.

 

The SEC serves numerous aims, but perhaps its most critical purpose involves public education. By enforcing numerous financial and business reporting requirements as applied to public companies, the SEC helps to ensure the “steady flow of timely, comprehensive, and accurate information (so that the public can) make sound investment decisions.” (SEC website)

There are five divisions of the SEC. These divisions serve the different aims of the SEC as a whole. They include:

  •         Corporation Finance
  •         Trading and Markets
  •         Investment Management
  •         Enforcement
  •         Economic and Risk Analysis

In addition to enforcing reporting compliance regulations, the SEC regulates securities markets through interpreting and enforcing existing federal securities laws, amending existing rules and issuing new rules when appropriate, coordinating securities regulation with domestic and foreign governing bodies and overseeing regulatory organizations in the accounting, auditing and securities industries.

 

EXAMPLE:

Accountant One: “Time to file another quarterly financial report with the Securities and Exchange Commission.”

Accountant Two: “MAN. I feel like we have to file these reports all the time. Like, every quarter!”

Accountant One: “…Yes. Me too.”