LeoGlossary: Securities and Exchange Commission (SEC)
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.
It is also in charge of maintaining the securities industry and stock and options exchanges, as well as regulating electronic securities markets and other activities in the United States.
The SEC is located in Washington DC and has 11 regional offices throughout the country. It aims to provide protection to investors and ensure that markets are fair, efficient, and in order. It also strives to create a market environment that people can trust.
Divisions
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Division of Corporation Finance
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Division of Trading and Markets
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Division of Investment Management
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Division of Enforcement
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Division of Economic and Risk Analysis
Mission
The SEC has a three-part mission: to protect investors, maintain fair, orderly, and efficient markets, and facilitate capital formation.
To achieve its mandate, the SEC enforces the statutory requirement that public companies and other regulated companies submit quarterly and annual reports, as well as other periodic reports. In addition to annual financial reports, company executives must provide a narrative account, called the "management discussion and analysis" (MD&A), that outlines the previous year of operations and explains how the company fared in that time period. MD&A will usually also touch on the upcoming year, outlining future goals and approaches to new projects. In an attempt to level the playing field for all investors, the SEC maintains an online database called EDGAR (the Electronic Data Gathering, Analysis, and Retrieval system) online from which investors can access this and other information filed with the agency.
Regional Offices
- Atlanta
- Boston
- Chicago
- Denver
- Fort Worth
- Los Angeles
- Miami
- New York City
- Philadelphia
- Salt Lake City
- San Francisco
General:
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