On the financial market, and especially on the securities market, there has always been the issue of regulation and compliance with the laws and rights of market participants. After all, you can come across many scammers and unscrupulous brokers. To help with issues involving intentional violations of rules and laws, special financial regulators have been created to help ensure security for funds, both brokers and traders. One of the most popular regulators is the US Securities and Exchange Commission (SEC). We talk about this regulator and the scope of its activities.
The US Securities and Exchange Commission (SEC) - the main regulatory company in the US securities market, monitors the operation of stock exchanges.
How the SEC works
The Securities and Exchange Commission appeared in 1934, a year after the adoption of the Securities Act in the United States. At the time, these measures were taken to support the American economy, which was hit hard by the Great Depression. Nowadays, the main goal of the SEC is to establish the rules for registering securities and monitor their implementation, protect investors' rights and support them. Since brokers quite often provide traders with the opportunity to trade in securities, the need for the presence of such a regulator as the SEC should not be underestimated.
The main objectives of the SEC:
• Support for regulated and efficient markets.
• Monitoring compliance with federal laws related to the market.
• Protection of the rights of investors, including fraudsters.
• Monitoring what is happening on the securities market and creating a legal basis for registration.
• Assistance in the development of financial markets.
• Control over the availability of information provided by companies to their investors.
• Monitoring corporate acquisitions in the United States.
• Monitoring the activities of private regulators and their compliance with legal standards, accounting audits.
The SEC is one of the agencies of the US Federal Government. Since the US financial market is the leading economic market in the world which influences all markets, its regulators are also the subject of attention of traders all over the world. The SEC is one of the four largest regulators of the US financial market.
As a regulator, the SEC has a very wide sphere of influence in the economic sphere, has an independent judiciary which it participates in the most complex legal disputes in the market. Those tools and methods used by the SEC to resolve disputes and conflicts are the standard for international regulators.
SEC controls include:
1. Participants in financial markets. This is a significant group, which includes:
• Commodity and stock exchanges - NYSE, NYMEX, COMEX, NASDAQ, CME, CBOT, MGEX, BATS Global Markets, ICE, CBOE and many others.
• All OTC markets - OTC Bulletin Board OTC, Markets Group and so on.
• All hedge funds.
• Financial asset management holdings, including the largest, such as JPMorgan Chase.
• Issuers issuing securities of all kinds, both to stock markets and over-the-counter.
• Investment banks.
• ETF funds, including giants such as iShares and SSGA.
• Brokers and market makers.
2. All types of securities and financial instruments. This includes stocks, bills, futures, options, warrants, checks, swaps, deposits, certificates, etc.
3. All types of investors having 5% of the shares of any enterprise. When buying this amount of assets, the investor must be registered in the SEC database.
4. All traders trading on the territory or trading floor of the United States.
Simply put, almost everything that is invested or deals with securities, one way or another, falls under the control of the SEC. To collect applications, the SEC uses a special EDGAR data collection system that works online and where anyone can file a complaint, for example, against an unscrupulous issuer or broker.
How the SEC works
The SEC is organized quite simply and efficiently:
• Corporate Finance Department - monitors the reporting of issuers of all kinds.
• Investment Management Department - regulates both investment funds and investment advisors.
• Market trading department - controls the participants in free trade and self-regulatory market corporations.
• Legal department - conducts various types of investigations about violations.
• Analytical department - research of risks, market strategies, innovations.
SEC Structure:
• 5 SEC members, one of which is the chairman (changes annually).
• 24 units that support 5 main departments. This includes lawyers, auditors, specialists, etc.
• 11 regional offices scattered throughout the United States.
Offenses investigated by the SEC
SEC Investigations
There are a number of unlawful actions that can be taken under investigation by the SEC.
• Theft of assets.
• Intentionally manipulating market prices of assets.
• Intentionally providing incorrect information or concealing important information about securities.
• Trading in securities of any kind that have not been registered.
• Insider trading in securities.
• Illegal actions of brokers in relation to customers and systematic violations of the rules.
As you can understand, thanks to the work of the SEC, the legislative framework in the financial market is maintained and improved which makes investor funds safer.
