U.S. Securities and Exchange Commission

The U.S. Securities and Exchange Commission (SEC) was created by Congress in 1934 as the first federal regulator of the securities market. As an independent federal government regulatory agency, the SEC is responsible for protecting investors, maintaining the fair and orderly functioning of the securities markets, and facilitating capital formation. Further, the SEC promotes full public disclosure, protects investors against fraudulent and manipulative practices in the market, monitors corporate takeover actions in the United States, and approves registration statements for bookrunners among underwriting firms.

The SEC oversees more than 30,000 registrants, which includes 12,000 public companies, 4,600 mutual funds, 11,300 investment advisers, 600 transfer agencies, and 5,500 broker deals. Of the approximately 12,000 public companies, around 1,150 are non-U.S. companies that operate in the United States or on U.S. securities markets.

Prior to the founding of the U.S. Securities and Exchange Commission (SEC), there were "blue sky laws," which were enforced at the state level and responsible for regulating sales of securities and protecting the investing public against fraud. However, with the Stock Market Crash of 1929, among other incidents, these laws were found to be ineffective. Congress moved to pass the Securities Act of 1933, which regulated the interstate sale of securities at the federal level, and the Securities Exchange Act of 1934, which regulated the sale of securities of the secondary market. The SEC was created by Section 4 of the Securities Exchange Act of 1934 to enforce federal securities laws.

The SEC is comprised of five commissioners appointed by the President of the United States, with one of those commissioners designated as the Chairman of the Commission. The law governing the SEC dictates that no more than three of the five commissioners may come from the same political party in an attempt to balance the SEC between political parties and ensure non-partisanship. These commissioners and the divisions of the SEC are intended to enable the Commission to complete their responsibilities of protecting investors, maintaining fair and efficient markets, and facilitating capital formation.

The SEC's Division of Corporate Finance is responsible for overseeing the corporate disclosure of important information to investors, ensuring that when stock is sold, a corporation adheres to regulations related to disclosure and regularly reviews disclosure documents filed by corporations. The Division of Corporate Finance also helps interpret the rules of the SEC and offers recommendations related to new rules and revisions to existing rules.

The SEC's Division of Economic and Risk Analysis (DERA) was founded in September 2009 to integrate rigorous data analytics and financial economics into the core missions of the SEC. DERA is involved across the range of SEC activities, including policy-making, rule-making, enforcement, and examination, with multi-disciplinary analyses informed by research insights. DERA works to assist the SEC with efforts to identify, analyze, and respond to economic and market issues, including those related to new financial products, systemic risk, and fraud.

The Division of Enforcement was created in August 1972 to consolidate enforcement activities that had previously been handled by each independent division. The Division of Enforcement conducts investigations into possible violations of the federal securities laws, prosecutes the Commission's civil suits in federal courts, and works with law enforcement agencies during criminal cases. In civil suits, the Division of Enforcement and SEC work to seek civil money penalties and disgorgement of illegal profits and can seek to bar individuals from acting as corporate officers or directors.

The Division of Examination conducts the SEC's National Exam Program and supports the mission to protect investors, ensure market integrity, and support responsible capital formation through risk-focused strategies intended to improve compliance, prevent fraud, monitor risk, and inform policy. The results of the Division's examinations are further used by the SEC to inform rule-making, identify and monitor risks, improve industry practices, and pursue misconduct. In order to improve, the Division continues to implement the collection and analyses of a wide range of data about all registrants.

The Division of Investment Management helps the SEC to oversee and regulate the country's investment management industry and ensures disclosures about investments such as mutual funds and exchange-traded funds are useful to retail customers. The division also develops regulatory policy for investment companies and for investment advisers.

The Division of Trading and Markets was established to develop and maintain standards for fair, orderly, and efficient markets and regulates the major securities market participants, including broker-dealers, self-regulatory organizations, and transfer agents.