What is the SEC and What Does It Do?

The SEC is the acronym for the Securities Exchange Commission. It was created in 1934 after the Great Depression of 1929, in order to help restore the public’s faith in the stock market. Many people lost everything they had when the stock market crashed and as a result a new and more secure regulative measure was needed. The SEC has five separate divisions and each concentrates on a different aspect of the financial investments world. The following is an explanation for the divisions as well as what the overall function of each is.

Division of Corporate Finance

The mission of this particular sect of the SEC is to make sure that investors are given all the proper material and tools to enable them to make educated investment decisions. Their job is to over see the process in which a company first offers its public stock options, as well as to continue to regulate all ongoing stock options and inform the public of all pertinent information surrounding these options. In addition, this division is responsible for proving comprehensive support to all companies regarding SEC rules, as well as forms which are used for filing. The Division of Corporate Finance also makes proposals for rule revisions directly to the Commission.

Division of Trading and Markets Regulation

This division is in place to regulate the standards by which the stock markets, such as NASDAQ and NYSE operate. The function of this division is to be sure that each market maintains a fair, organized, and efficient standard. In addition, in order to protect the public as well as corporations, it regulates participants of the chief securities market. This includes self regulating organizations, brokerages and trading agents.

Division of Enforcement

In 1972 the SEC created this division in an effort to consolidate all enforcement measures which had bee previously handled by a variety of operating divisions within the Commissions headquarters in Washington DC. The Division employs people to conduct various investigations into potential violations of the federal securities laws. In addition, this division carries out the prosecution of anyone in direct violation of any rules or regulations in regards to civil suits, as well as cases that reach the federal courts.

Division of Risk, Strategy, and Financial Innovation

This Division was developed in 2009 as a means to consolidate the duties and responsibilities of the “Office of Risk Assessment”, as well as the “Office of Economic Analysis” into just one office which oversees all issues associated with these subjects. Three main areas are the focus of this division. They are strategic research, financial innovation and economic analysis. In addition this office has responsibilities in the “think tank”, as well as many other roles.

Division of Investment Management

This division is responsible for overseeing all matters of concern regarding the many different investment companies. This includes, closed end funds, ETF, UIT, mutual funds, as well as internal funds. In addition, this division governs over a variety of insurance products as well as investment firms which are federally registered.

The SEC has filed suit against members of the Dow Jones as well as a number of other prestigious names in the financial world. Their reach is wide and the ground they cover is vast. In short, the SEC oversees all aspects of the various investment markets as well as the stock trading arenas.