What is the Securities and Exchange Commission (SEC)?

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  • Written By: Mary McMahon
  • Edited By: Bronwyn Harris
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  • Last Modified Date: 03 November 2019
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In the United States, the Securities and Exchange Commission (SEC) is a Federal agency which regulates the sale and trade of securities and similar investments. The SEC protects investors and promotes market development with the aim of maintaining America's global role as an economic powerhouse. The agency was founded in 1934, as part of a regulatory response to the events of the stock market crash of 1929, during which the Federal government finally realized a need for regulation of investments in the United States. Headquartered in Washington, D.C., the SEC has a governing staff of five appointed commissioners and 11 regional offices that amend and enforce laws pertaining to investments.

One of the most important parts of the SEC's mission is maintaining a transparent market. The agency heavily regulates the trade of securities in the United States, requiring companies to file numerous documents throughout the year that can be taken together to provide an accurate image of the company's overall financial health. These documents are maintained in a public database that can be inspected by anyone, and are readily available through the electronic documentation system on the agency's website. The SEC can order an audit of a company which it suspects of unlawful practices, and bring violators of the law to court.


As part of the SEC's mission to protect investors, the agency regulates the sale and exchange of stocks and the people who sell them. Stockbrokers, dealers, and exchanges must go through the SEC and be subject to periodic inspection in order to make certain that they are serving their customers well. Consumers can file reports about unfair practices with the agency, and should take advantage of the its extensive available documentation on publicly traded companies.

The SEC is also focused on promoting market growth through sustained buildup of capital. Companies that are interested in becoming publicly traded must file documents with the SEC before making an initial public offering, and the agency maintains a large staff to help companies comply with its regulations. Companies that must file documents with the SEC use a large database of documents, which includes instructions and regulations, and can also consult with agency staff to make sure that they are complying with the law.

Another important function of the SEC is consumer education. Anyone who is interested in investing can access valuable information and advice through the agency, including publications and workshops about safe investing. The SEC can also offer information on careers in the investment field, and maintains a staff to handle consumer complaints and issues. If a consumer complaint is deemed worthy of investigation, the SEC may bring the offending company or individual to justice in a court of law, and may be able to recover illegal profits.


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