Securities and Exchange Commission

6 June 2016

The Securities and Exchange Commission is a government agency with the primary responsibility of enforcing the federal securities laws and regulating the securities industry or stock market. The main reason for the creation of the (U.S.) SEC in 1934 as an independent, non-partisan, quasi-judicial agency was to regulate the stock market and prevent corporate abuses relating to the offering and sale of securities and corporate reporting. The SEC was given the power to license and regulate stock exchanges.

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The SEC, as allowed by the Congress, can bring “civil enforcement actions against individuals or companies found to have committed accounting fraud, provide false information or engaged insider trading or other violations of the securities law.” It was designed to promote full public disclosure and to protect the investing public fraudulent and manipulative practices in the securities market.

The U.S. SEC is composed five commissioners appointed by the U.S. President and approved by the Senate and one of them is appointed as the Chairman of the Commission – the agency’s chief executive.  The responsibilities of this regulatory agency are organized into four Divisions and 18 offices, all located in Washington, DC. However, there are also Securities and Exchange Commission agencies in other countries, independent or separate from the U.S. SEC.

Since the SEC oversees the inspection of securities firms, brokers, investment advisers and ratings agencies, it can closely monitor the regularities, or its lack thereof, in firms and take the necessary action against those committing fraud and manipulative acts. It can righteously propose and implement rules regarding the operations of the securities markets. As mandated by SEC, public companies submit quarterly and annual reports as part of its statutory requirement.

This is crucial for the investors to make sound decisions when investing in the capital markets. Through this, the SEC can appropriately keep an eye on the operations of its registered firms thereby achieving assuring fair and factual undertakings.

Reference

US Securities and Exchange Commission. 2007, September 11. “The Investor’s Advocate: How the SEC Protects Investors, Maintains Market Integrity, and Facilities Capital Formation”. Retrieved October 29, 2007, from http://www.sec.gov/about/whatwedo.shtml#laws.

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