Securities and Exchange Commission

Founders: The Unites States Congress

Industry:

Government – the Securities and Exchange Commission (SEC) is a regulatory agency responsible for administering the U.S. laws regarding securities.

History:

The Securities and Exchange Commission (SEC) was established to ensure fair markets and provide accurate information to investors. It is responsible for putting into effect the U.S. laws regarding securities.

SEC was founded during the post-World War I period when there was a surge in securities activity. Everyone was out to make their fortune on the stock market.

Due to insufficient foresight put into the risks involved in margin financing and unreliable information about the securities in which they were investing, half of the new securities offered during this period became worthless. There was no control over the issuing and trading of securities, almost inviting frauds and other schemes. When the stock market crashed in 1929, investors, as well as the banks that loaned to them, went bankrupt, resulting in the Great Depression.
The SEC was designed as a solution to the economic chaos. It was patterned to restore faith in capital markets.

At the peak of the Depression, the Securities Act of 1933 was passed. The Securities Exchange Act of 1934, which created the SEC, proposed to restore faith in the market by providing investors with more reliable information and clear guidelines of honest dealing. The laws were drawn up to instill in companies publicly offering securities for investment dollars the importance of revealing to the public the true nature of their business, the securities they are selling, and the risks involved in investing.

The SEC is made up of five commissioners who are appointed by the president. These commissioners rotate off the commission every 5th of June.

Today, the SEC continues to oversee stock market activity and Wall Street practices in order to stop those who try to manipulate the markets illegally for their own gain, reporting cases to the Division of Enforcement if criminal prosecution is called for.

Leadership:

Mary Schapiro, Chairman

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