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What is the Securities and Exchange Commission and What Exactly Does it Do?

What is the Securities and Exchange Commission and What Exactly Does it Do?

 

Photo Credit: Alex E. Proimos

The Securities and Exchange Commission, or SEC as it is commonly known as, is a group set forth to protect investors and keep the functions of the stock market and financial world in order. The SEC was created in 1934 after the Great Depression and the stock market crash of 1929. This commission is charged with enforcing multiple pieces of legislation that have been put in place to keep the financial world as honest and fair as humanly possible.

The Securities and Exchange Commission enforces numerous acts in their daily activities; six of those acts are explained here:

  • Securities Act of 1933: This act was the first attempt at bringing regulation to stock market securities. This act requires that companies putting securities on their stocks register with the SEC.
  • Securities Exchange Act of 1934: This act is all about putting regulation standards in place regarding the sellersof stocks (brokers and dealers, etc).
  • Investment Companies Act of 1940: This act provides protection for investors and mandates that the companies offering both securities and mutual funds disclose the information about their company publically.
  • Investment Advisors Act of 1940:  Just like the Investment Companies Act of 1940, this act is also set forward to provide protection for investors. In this case, protection is from privately sought advisors that sometimes take advantage of their investor clients.
  • Sarbanes-Oxley Act of 2002: As discussed in our previous blog posts, the SOX Act was enacted after scandals like Enron as an effort to maintain financial integrity with corporations and companies.
  • Credit Rating Agency Reform Act of 2006: This act was created to encourage competition to increase quality in credit reporting agencies’ accuracy. This act requires these agencies to register with the SEC.

As you can see, the Securities Exchange Commission is not only charged with many tasks, it is held responsible for many significant aspects of the financial world. Conquering these tasks is no easy feat. If you or your company are looking to create financial plans that are SEC compliant, we encourage you to contact Stock Connections for help. We specialize in SEC and SOX compliance and are happy to help keep you and your business financially sound.

 

 

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