Used with permission from the United States Securities and Exchange Commission.
The Role of the SEC
The U. S. Securities and Exchange Commission (SEC) has a three-part mission:
- Protect investors
- Maintain fair, orderly, and efficient markets
- Facilitate capital formation
Congress Created the SEC
When the stock market crashed in October 1929, so did public confidence in the U.S. markets. Congress held hearings to identify the problems and search for solutions. Based on its findings, Congress – in the peak year of the Depression – passed the Securities Act of 1933. The following year, it passed the Securities Exchange Act of 1934, which created the SEC.
The main purposes of these laws can be reduced to two common-sense notions:
- Companies offering securities for sale to the public must tell the truth about their business, the securities they are selling, and the risks involved in investing in those securities
- Those who sell and trade securities – brokers, dealers, and exchanges – must treat investors fairly and honestly.