LeoGlossary: Securities and Exchange Commission (SEC)

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An independent federal regulatory agency that is tasked with the oversight of the securities markets. One of the main goals is to protect investors from predatory and criminal activity.

It was created in 1934 in response to the Crash of 1929 and the ensuing Depression. The main focus is to take action against fraudulent and manipulative practices in markets.

The issuance of securities must first be registered with the SEC before being sold. Failure to do this puts the offering outside the bounds of legality. When this occurs, the agency will take civil action against those making the offering.

If there is criminal activity, the SEC will work with the Justice Department who is responsible for filing any criminal charges.

When the SEC takes actions, it sets forth with two goals in mind:

  • injunctions: stopping the activity going forward
  • civil penalties

If the action is taken against ones licensed by the SEC, permanent disbarment from being on corporate boards or providing licensed financial services.

General:

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