Knowledgebase

What Is The U.S. Securities And Exchange Commission?

The Securities and Exchange Commission is an independent government agency responsible for regulating the securities industry in the United States. In this capacity, it pursues a three-part mission: to protect investors, to maintain the fairness and safety of securities markets, and to facilitate capital formation.

The first regulatory body of its kind, the SEC was introduced after the stock market crash of 1929 when public confidence in the securities industry was at a low. Following the passage of the Securities Act (1933) and the Securities Exchange Act (1934), the SEC was established in 1934 with a goal to ensure that securities institutions operated safely, told the truth about their products and services, and treated their investors “fairly and honestly”.

Securities And Exchange Commission SEC

SEC Organization

The SEC is organized into five divisions – Corporate Finance, Trading & Markets, Investment Management, Enforcement, and Economic & Risk Analysis – along with numerous sub-offices. 5 commissioners lead the SEC on staggered 5-year terms – with the requirement that no more than three belong to the same political party to ensure non-partisanship. Headquartered in Washington DC, the SEC maintains 11 regional offices across the US.

What Does the SEC Do?

The SEC is primarily concerned with monitoring the key participants in the securities industry: securities exchanges, brokers and dealers, investment advisors and mutual funds. It ensures that each discloses important market information to their investors and protect against financial crime including money laundering, terrorist financing, insider trading, and fraud. Coordinating across its five divisions, in its own words the SEC is responsible for:

  • Interpreting and enforcing federal securities laws
  • Issuing new – and amending existing – rules and regulations
  • Overseeing the inspection of securities firms, brokers, investment advisers, and rating agencies
  • Overseeing private regulatory organizations within the securities, accounting, and auditing fields
  • Coordinating US securities regulations with federal, state, and foreign authorities

When firms are found to be in violation of securities laws, the SEC may recommend a federal investigation into their activities, before pursuing a prosecution through its Enforcement division.

SEC Enforcement

Each year, the SEC brings hundreds of enforcement actions against both firms and individuals which violate securities laws. Beyond monitoring suspicious activities, in order to recommend investigations and prosecutions the SEC sources a substantial amount of information from investors themselves. To this end, it works to keep the public informed and maintains the EDGAR database which investors can use to access information about securities companies they are dealing with.

Our AML solutions will help you remain compliant with the most up to date AML regulations.

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