The SEC, also known as the Securities and Exchange Commission, is a regulatory agency established by the United States federal government. Created through the Securities Exchange Act of 1934, the SEC primary mission is to protect investors and maintain the integrity of the securities market. It achieves this by fostering fair, orderly, and efficient markets while facilitating capital formation.
The SEC is entrusted with the responsibility of enforcing federal securities laws, ensuring that companies and individuals within the securities industry follow the necessary regulations. Its jurisdiction covers a wide range of participants, including public companies, securities exchanges, brokers, investment advisors, and mutual funds. The SEC requires these entities to disclose essential financial information to the public, ensuring transparency and reducing the asymmetry of information.
Furthermore, the SEC aims to prevent fraudulent activities and unfair practices through investigations, enforcement actions, and prosecutions. It oversees the registration and regulation of securities offerings, mergers and acquisitions, and other significant corporate actions. The SEC has the authority to create rules and regulations to interpret and implement securities laws, and to oversee entities such as self-regulatory organizations like FINRA.
By carrying out its duties, the SEC plays a vital role in safeguarding investors' interests, promoting capital formation, and maintaining the confidence and efficiency of the securities markets. Its regulatory oversight helps ensure that market participants adhere to the rules, improving market integrity and enabling fair and informed investment decisions.
