SEC

DEFINITION of SEC

The SEC stands for the US Securities and Exchange Commission. It is a government agency set up to regulate markets and protect investors in the United States, as well as overseeing any mergers and acquisitions.

WHAT IT IS IN ESSENCE

Set up in 1934, the SEC’s mandate is to enforce US laws on the trading of securities (financial assets), maintain fair and efficient markets. To ensure investors aren’t subject to abuse and help maintain a well-functioning economy.

This commission requires any individual who purchases more than 5% of a company’s ownership stock to declare it.

It also enforces the publication of regular earnings reports from public companies and prosecutes those who break securities laws.

The SEC is made up of a five-person commission, with each member serving a five-year term.

The SEC’s primary goal is to protect investors and maintain orderly markets that are fair and efficient for all. Created in the wake of the Great Depression in order to enforce newly-passed securities laws, the SEC was part of Congress’ plan to restore the public’s confidence in the market.

HOW TO USE

The SEC consists of five commissioners who serve staggered five-year terms. No more than three of the commissioners may belong to the same political party.

In order to achieve these goals, the SEC issues rules to govern the securities industry. And, while the entirety of the rules imposed by the SEC is well beyond the scope of this article, they can generally be divided into two main ideas:

  • If companies offer securities to the public, they must tell the truth about their business and the risks involved.
  • People who sell and trade securities must treat investors fairly and honestly.

The SEC consists of five commissioners, appointed to staggered five-year terms by the president, no more than three of which can belong to the same political party. Supporting the commissioners is a staff of approximately 4,600 people, spread out across the SEC’s 12 offices throughout the U.S.