The SEC , or Securities and Exchange Commission (Commission of the financial titles and the purses) is in the United States the federal organization of regulation and Contrôle of the financial markets. It is to some extent the American “gendarme of the Bourse”, with the functions generally similar to those of MFA French.

The financial laws and regulations which control the financial market in the United States come from the simple principle that any investor, institutional or deprived, must have access to a minimum of information before buying and throughout all detention of the actions.

Origin of the SEC

The SEC was created by application of article 4 of Securities Exchange Act off 1934 voted by the Congress in answer to the period of recession which followed the great stock exchange crash of 1929. The SEC was mainly created with an aim of making apply the new financial laws, promote the stability of the markets and especially protect the investors from the abuses companies relating to the purchases and sale from actions like to information made public.

Franklin D. Roosevelt named Jospeh P. Kennedy, the father of John F. Kennedy, like first president of the SEC in 1934.

6 principal financial laws

SEC with the responsibility to make apply the 6 principal financial laws which control financial industry and which are:

  • Securities Act off 1933

This law has two main aims:

A) to ensure the investors the provision of financial informations and any other significant information concerning the financial products (actions, obligations) calling public upon the saving, and

B) to prohibit the dissimulation, the deformation and any other fraud in the product sales financial.

  • Securities Exchange Act off 1934

This law is at the origin of the creation of the SEC and any authority gives him on the financial industry regulation supervision. The New York Exchange Stock, American Exchange Stock and the National Association off Securities Dealers, which manages the NASDAQ, are under the supervision of the SEC.

This law identifies and prohibits certain behaviors on the markets and equips the SEC with disciplinary powers on the entities and the people who are associated there.

The law also gives to the SEC the right to require periodic information papers on behalf of the companies calling public upon the saving.

  • the Trust Indenture Act off 1939

This law applies to the financial products of obligations type, certificates and credits proposed with the public. Although these products can be covered by Securities Act off 1933, they can not be open to the public with less than one formal agreement between the transmitter of the obligations and the holder (the trust indenture) in conformity with the requirements of the aforesaid the law.

  • Investment Company Act off 1940

This law regulates the organization of companies, such as the investment funds, which invest in actions and whose their own actions are opened to the public. This law requires in particular the publication of information on the bottom, its objectives of investments, its structure and its operations, bound for the public investors.

  • Investment Advisers Act off 1940

This law regulates the profession of the advisers in investment. Since the amendment of 1996, only the advisers with a management of incur of more than $25 million or those which manage incur them of a listed investment company must be listed near the SEC.

  • Sarbanes-Oxley Act off 2002

See also: Law Sarbanes-Oxley

This law aims at improving the responsibility for the companies as regards publication of financial information and the fight against the fraud. It is at the origin of the creation of the Public Accounting Oversight Board which supervises the activities of the cabinets of audit.

Organization of the SEC

The SEC is based in Washington and comprises 5 police chiefs named by the president of the United States with the council and the assent of the Senate. The mandate of the police chiefs is 5 years and one of them is replaced on June 5th of each year. To ensure the neutrality of the SEC, it there forever more than 3 police chiefs who belong to the same political party. The president of the United States appoints the President of the SEC among the 5 police chiefs.

The SEC has 4 divisions, 18 offices and employs approximately 3.100 people. It has apart from its seat in Washington 11 regional offices distributed in the United States.

4 divisions are:

  • Corporation Finances

This division is charged to supervise the publications realized by the companies and of the recording of the transactions such as the amalgamations of companies. It is also responsible for the system EDGAR (Electronic Data Gathering, Analysis, and Retrieval system) which places at the disposal of the public the whole of the periodic reports/ratios of the companies which it is in addition charged to analyze. It is also responsible for the interpretation of the regulation.

  • Market Regulation

This division supervises the activity of the organizations of purse (such as the NYSE), the companies of broking and investment and other major actors of the purse.

  • Investment Management

This division supervises and controls the $15 000 billion the industry of the management of credits and manages the laws affecting the investment companies and of council in investment.

  • Enforcement

This division carries out investigations into the possible violations of the laws, advises the SEC and negotiates the agreements on behalf of the SEC. Although the SEC has only authority on the civil shutter, she works in close relationship to the organizations being able to act on the penal level.

See too

Related articles

External bond

  • Site of the SEC

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