The U.S. Securities and Exchange Commission:
What It Is, What It Does
The SEC is an independent, nonpartisan, quasijudicial regulatory agency with responsibility for administering the federal securities laws. The purpose of these laws is to protect investors in securities markets that operate fairly and to ensure that investors have access to disclosure of all material information concerning publicly traded securities. The Commission also regulates firms engaged in the purchase or sale of securities, people who provide investment advice, and investment companies. The Commission enforces the following laws:
Securities Act of 1933
Often referred to as the "truth in securities" law, the Securities Act of 1933 requires that investors receive financial and other significant information concerning securities being offered for public sale. This act also prohibits deceit, misrepresentations and other fraud in the sale of securities.
Securities Exchange Act of 1934
This Act requires that investors have access to current financial and other information regarding securities, particularly those that trade publicly on exchanges or over-the-counter. This Act also prohibits companies, securities brokerage firms and others from engaging in fraudulent and unfair behavior, for example sales practice abuses and insider trading. Rules concerning the operation of the markets and participants, including proxy solicitations by companies and shareholders, tender offers and buying securities on credit (margin), are also part of this Act.
Investment Company Act of 1940
Activities of companies, including mutual funds, engaged primarily in investing, reinvesting, and trading in securities, and whose own securities are offered to the investing public, are subject to certain statutory prohibitions and to Commission regulation under this act. Also, public offerings of investment company securities must be registered under the Securities Act of 1933.
Investment Adviser Act of 1940
This law establishes a pattern of regulating investment advisers. In some respects, it has provisions similar to the Securities Exchange Act that governs the conduct of securities brokers and dealers. With certain exceptions, this act requires that persons or firms compensated for advising others about securities investment must register with the Commission and conform to statutory standards designed to protect investors. |
