The Securities Exchange of 1934 created the Securities and Exchange Commission. This act is a law that controls how stocks, bonds, and debentures are traded. Franklin D. Roosevelt set up the SEC in 1934 during the Great Depression. Before the Stock Market Crash and Great Depression, there weren’t many laws governing the stock market. The SEC helped the Stock Market.
The main purpose of the SEC was to regulate the stock market and prevent corporate abuses having to do with sales securities. The SEC is allowed to take civil actions against companies or people that have committed accounting fraud. Companies that have given false information or have taken part in insider trading can also have actions against them. Insider trading is when when a companies stocks or bond are traded with someone who has information that is nonpublic.
The SEC is responsible for enforcing the United States’ security laws. The SEC also enforces the Securities Act of 1933, the Trust Indenture Act of 1939, the Investment Company Act of 1940, the Investment Advisers Act of 1940, and the Sarbanes–Oxley Act of 2002. The SEC doesn’t allow investors to buy stock without enough money to pay for it. The 1935 Public Utility Holding Company Act allowed the SEC to break up large utility companies. This allowed there to be smaller utility companies and federal commissions to control the rates.
The SEC has to power to regulate stock exchanges, the companies that had traded securities, and the dealers that carried out the trading. The SEC requires that every company send in reports about their business in order to enforce these laws. The reports are sent in quarterly and annually. Companies also have to send in reports showing how they did in the past year, to show improvement or decline of a business. These reports are important to investors looking to invest in a company.
The SEC has five commissioners that the President selects. The Senate also has to agree. The terms are staggered. A new commissioner is elected every year, when another one’s term ends. There are 5 divisions of the SEC. The divisions are Corporation Finance, Trading and Markets, Investment Management, Enforcement, and Risk, Strategy, and Financial Innovation.
One of the commissioners of the SEC
http://en.wikipedia.org/wiki/U.S._Securities_and_Exchange_Commission
http://www.sec.gov/about/whatwedo.shtml
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