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:
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.
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.
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