The market structure is constantly changing, and new challenges have to be dealt with. There are dishonest individuals out there, and the marketplace creates those rules to protect everybody and create fairness. Therefore, in this article, we will be discussing the security and exchange commission.
What is the Security Exchange Commission?
The government created the security and exchange commission (SEC) to regulate the buying and selling of stocks and bonds to protect investors against fraud. Generally, the SEC’s mission is to sustain a growing economy that creates jobs, promotes living standards, and protects investors. The SEC is also responsible for ensuring that the ordinary investor has the exact information as the people who manage and control public companies.
Why Does it Exist
Think of it this way, the security and exchange commission (SEC) is like the police force for congress’s laws concerning stocks and bonds. The SEC requires all companies to file financial reports and other information about their company every quarter and year. The SEC then reviews the information to ensure that all companies abide by the laws and that this information is not private and is filed with the SEC.
The information is accessible to any investor who purchases or owns stocks. This way, people will have the information to decide whether they would like to buy, sell or even hold a particular stock. Furthermore, the security and exchange commission also ensures that people who own stock are considered insiders because their role or work entails them having undisclosed information about the company and not taking advantage of the inside information.
What Does The SEC Do
The security and exchange commission manages various tasks. Some of these tasks include:
- The protection of every investor’s rights
- They control the information that companies provide to investors
- They assist in the development and improvement of the financial market
- The SEC monitors compliance with federal laws
- The SEC keeps track of corporate takeover operations
- They keep an eye out on the activities of private regulators
The SEC also monitors:
- OTC markets
- Financial asset management holdings
- Investment banks
- Brokers and market makers
- EFT funds
- Issuers issuing securities
- Hedge funds
- Commodity and stock exchanges
- Security and financial instruments
- Investors who have 5% of shares in any one company
How Can I Contact them?
There are various ways to contact the SEC. Their phone numbers are 1-202-551-6551, 1-202-551-4119 (Disability Program), toll-free 1-800-732-0330 (Investor Information), or you can also visit their website.
Interesting Facts About The SEC
There are quite a few interesting facts about the SEC, let’s take a look at a few:
- In the peak year of the great depression, Congress passed the security act in 1934; hence, the SEC was established.
- The SEC deals with civil matters, not criminal ones because their actions often result in fines.
- The SEC oversees brokers and investment advisors and requires businesses to disclose their financial information to help adequately inform investors publicly.
- The SEC can review and investigate suspicious financial dealing.
- They can transfer cases to criminal authorities and bring lawsuits connected with criminal cases, but they cannot arrest persons.
- The SEC is an agency of the United States federal government.
- SEC commissioners are appointed by the president of the United States and approved by the senate. (There are five commissioners)
- The SEC was created under Franklin Roosevelt during the 1929 stock market crash.
- The SEC is different from the Federal Reserve Board (FED)
- The SEC main building is located in Washington DC
- The very first SEC chairman was Joseph P. Kennedy ( Joseph P. Kennedy was the father of John F Kennedy)
- The current SEC chairman is Gary Gensler
The Security and exchange commission has four major divisions.
- The Division of Corporation Finance – This division ensures corporate disclosure of important information to the investing public.
- The Division of Trading and Marketing – This division ensures fairness, order, and efficiency in marketing activities.
- The Division of Investment Management – This division helps protect investors and encourages capital formation through oversight and regulation of the investment management industry.
- The Division of Enforcement – This division investigates securities law violations and also initiates civil and criminal actions.
The SEC is expected to:
- Protect investors from abuses like fraud, misleading information and insider trading (private information shared with someone else who isn’t supposed to know).
- Promote a proper functional economy.
- Monitor corporate takeovers.