What is the SEC (Securities and Exchange Commission)?
Securities and Exchange Commission (SEC) Definition
The Securities and Exchange Commission, SEC, is an independent federal agency responsible for overseeing securities markets in order to protect investors, maintain fair securities exchange, and facilitate the formation of capital.
Congress created the SEC in 1934 in the wake of the Great Depression to help restore investor confidence in the securities market.
It is headed by five representatives, each of whom serves a term of five years.
To promote non-partisanism, no more than three representatives may be from the same political party.
Their terms are staggered so that only one representative is replaced each year.
Divisions of the SEC
The SEC has five divisions to interpret and enforce securities laws, provide oversight, and to coordinate regulation at different levels of government.
The five divisions are:
1. Division of Corporate Finance: Provides investors with material information to ensure that they can make informed investment decisions.
2. Division of Enforcement: Investigates cases and prosecutes civil suits to ensure that SEC regulations are maintained.
The SEC does not process criminal suits, however it does work closely with organizations that do, such as the Department of Justice.
3. Division of Investment Management: Provides regulation of financial institutions like investment companies and advisors.
4. Division of Economic and Risk Analysis: Incorporates economic and statistical data into SEC regulations.
5. Division of Trading and markets: Maintains standards for fair and orderly markets.
Examples of SEC Cases
Today the SEC continues its history of facilitating a fair and legal market space for investors.
It is involved in nearly every major case of financial misconduct, with its most common offences being insider trading, accounting fraud, and the dissemination of misleading or false information.