{"id":352700,"date":"2016-04-04T10:42:08","date_gmt":"2016-04-04T15:42:08","guid":{"rendered":"https:\/\/content.findlaw-admin.com\/ability-law\/consumer\/securities-law\/the-securities-and-exchange-commission-overview.html"},"modified":"2023-12-28T10:43:53","modified_gmt":"2023-12-28T15:43:53","slug":"the-securities-and-exchange-commission-overview","status":"publish","type":"page","link":"https:\/\/www.findlaw.com\/consumer\/securities-law\/the-securities-and-exchange-commission-overview.html","title":{"rendered":"The Securities and Exchange Commission Overview"},"content":{"rendered":"\n
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The Securities and Exchange Commission: Overview<\/h1>\n
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\n By FindLaw Staff<\/a> | Legally reviewed by Melissa Bender, Esq.<\/a>\n | Last updated\n
\n \n <\/i>\n Legally Reviewed\n <\/summary>\n\n
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This article has been written and reviewed for legal accuracy, clarity, and style by FindLaw\u2019s team of legal writers and attorneys<\/a> and in accordance with our editorial standards<\/a>.<\/em><\/p>\n\n <\/div>\n <\/details>\n\n

\n \n <\/i>\n Fact-Checked\n <\/summary>\n\n
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The last updated date refers to the last time this article was reviewed by FindLaw or one of our contributing authors<\/a>. We make every effort to keep our articles updated. For information regarding a specific legal issue affecting you, please contact an attorney in your area<\/a>.<\/em><\/p>\n\n <\/div>\n <\/details>\n<\/section>\n

The Securities and Exchange Commission (SEC) regulates American stock and securities exchanges, brokers, investment advisors, and mutual funds.<\/p>\r\n

Congress passed the Securities Exchange Act of 1934<\/a> to establish the SEC, among other things. The federal government created the SEC to restore investor confidence. It was also formed to help reform securities markets following the stock market crash of 1929 and during the Great Depression. Its mission is:<\/p>\r\n

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  1. Protect investors in capital markets<\/li>\r\n
  2. Maintain fair, orderly, and efficient markets<\/li>\r\n
  3. Facilitating capital formation<\/li>\r\n<\/ol>\r\n

    The SEC tries to carry out this mission by:<\/p>\r\n

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    1. Requiring public disclosure of financial information for publicly traded companies<\/li>\r\n
    2. Bringing enforcement against violators of securities law<\/a><\/li>\r\n
    3. Developing SEC rules for securities<\/li>\r\n<\/ol>\r\n

      Public Disclosure<\/h2>\r\n

      Reliable public information is essential in preventing fraud and promoting informed investment decisions. The SEC requires that public companies disclose important financial information<\/a> to the commission and the public.<\/p>\r\n

      When a company wants to sell a security, such as in a public stock offering, it must register that security with the SEC. Registration statements and prospectuses include descriptions of the company’s properties and business. They also include the security offered for sale, and financial statements made by independent accountants. Investors considering whether to buy a company’s securities use this information. It’s available on the EDGAR database<\/a>.<\/p>\r\n

      The SEC also requires several other forms of public disclosure. For example, companies worth over $10 million in assets held by more than 500 investors must file annual corporate reports. Companies must disclose information about shareholder votes to the SEC. They also must disclose information about offers to buy more than 5% or more of a company’s stock.<\/p>\r\n

      Enforcement<\/h2>\r\n

      The SEC’s regulatory power is backed by its enforcement authority<\/a>. The SEC may bring civil suits in federal court against violators of securities laws. The SEC can also partner with the Department of Justice in criminal actions. The Commission can bring actions against people or companies for violations such as:<\/p>\r\n