The Security and Exchange Commission (SEC) is a US federal government agency mandated to protect investors and maintain a fair and orderly function of securities market as well as facilitate capital formation. It was established by the Congress in 1934 as the Federal regulator of securities markets. The SEC work to ensure full disclosure and protect investors against fraudulent and manipulative practices in the market. They are also over corporate takeover action in all parts of the United States.
The main interest of all Americans is to grow their economy, increase jobs availability and improve their standard of living. The SEC is therefore mandated to promote capital formation and ensure sustainable growth. Note that the investment world is fascinating and complex, but unlike the banking world where the federal government guarantees deposits, stocks, bond, and other securities can easily lose value. The best way that investors can protect the money they invest in the security market is to do a thorough research and seeking advises from experts.
All the regulation in the United States that have been put in place to govern the security industry is derived mainly from simple and straightforward concepts that all investors deserve access to certain basic facts about an investment prior to buying it and as long as they hold it. To achieve this, the SEC requires all public companies to disclose meaningful financial and other information to the public. This allows investors to judge for themselves whether to buy, sell or hold their particular securities.
The Role and Responsibilities of the SEC:
As mandated by the U.S. government, SEC works to ensure that all publicly traded companies disclose their financial information to the general public. Investment advisers are also required to specify their volume of managed assets as well as services they offer. They also require public traded companies and investment advisers to disclose their payment schedule and fund expenses such as custody and brokerage fees.
Investment advisers should always disclose their disciplinary information as well as risk assessment and investment strategies and methods of analysis. They should disclose information about their brokerage practices and code of ethics. They should also disclose their trade aggregation, client referrals, direct brokerage as well as soft dollar practices.
The main work of the Securities and Exchange Commission is to protect creditors and customers. The organization registers all the brokers and work to comply with liquidity standards and register with SEC. Brokers are defined by the Commission as professional who under takes transactions on behalf of others. Most private investors work with brokers to sell and buy securities. Brokers are required to control excess margin and fully pay their client securities.
The commission helps to educate investors about their rights and maintain efficiency and transparent market, which can be achieved through reforms and enforcing controls over financial establishments. Lack of robust regulations can put the financial system at risk. The commission is also mandated to register all the hedge fund advisers as well as other managers registered with it.
The establishment act mandates the Securities and Exchange Commission to set rules and work with various entities to oversee the security market. Some of the entities that work with the Securities and Exchange Commission include stock brokers, utility companies, publicly held companies as well as investment advisers and companies. Dozens of the self-regulatory organization such as FINRA and MSRB work with the SEC to ensure fairness among the market players.
The Securities and Exchange Commission aims at maintaining efficiency, effectiveness, and transparency in the security exchange market. It monitors self-regulatory organizations, security companies as well as the stock markets. They understand that the market is ever evolving and always work to establish more robust regulations for the credit and bureaus as well the over-the counter derivatives.
Issues and originators must always retain an interest in securities in securitized debt, and the commission always works to develop better accounting and regulatory standards that serve the intended purpose. Over the years, SEC has reported a lot of improvement in the various sectors of the security exchange market, including the better risk-based evaluation of financial companies. Targeted training, as well as fraud detections, has improved greatly. Various risk assessments functions have been developed and are being implemented in various sectors of the agency. Over the years, SEC has expanded its task force through the hiring of professional with various industry experts.