The Purpose of the Securities and Exchange Commission

The SEC enforces securities laws.

The Securities and Exchange Commission (SEC) is an independent federal agency created by the Securities Exchange Act of 1934. The Commission creates rules designed to enforce federal securities laws.

History

After the U.S. stock market crashed in 1929, people were generally unwilling to invest in the securities markets. The U.S. government enacted several pieces of legislation designed to restore the public's faith in the markets, among them the 1934 Securities Exchange Act, which created the SEC.

Purpose

The SEC was created to perform two broad functions: protect investors and promote stability in the financial markets by enforcing securities laws enacted by Congress. The SEC has evolved into a strong agency, with broad power to make rules that control how the securities laws are enforced.

Functions

The SEC's specific functions are broken down into numerous departments. For example, Corporate Finance oversees the accuracy of public corporations' financial disclosures; Investment Management supervises investment companies and investment advisors; Market Regulation creates regulatory policy; and Enforcement prosecutes violators of federal securities laws.

References

• "Securities Regulation, Cases and Materials, Eleventh Edition"; Coffee, John C. and Hillary A. Sale; Foundation Press; 2009
• SEC: Creation of the SEC
• "Corporations, Other Limited Liability Entities and Partnerships"; Thomas Lee Hazen and Jerry W. Markham; West; 2008

Resources

• SEC: The Investor's Advocate