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U.S. ECONOMY > State & Federal Finance > Federal Departments and Regulatory Agencies > Securities and Exchange Commission

Securities and Exchange Commission

100 F Street NE.,
Washington, DC 20549
Phone, 202-551-7500.
Internet, www.sec.gov

The Securities and Exchange Commission (SEC) was created under authority of the Securities Exchange Act of 1934 (15 U.S.C. 78a-78jj) and was organized on July 2, 1934. The Commission serves as adviser to United States district courts in connection with reorganization proceedings for debtor corporations in which there is a substantial public interest. The Commission also has certain responsibilities under section 15 of the Bretton Woods Agreements Act of 1945 (22 U.S.C. 286k-1) and section 851(e) of the Internal Revenue Code of 1954 (26 U.S.C. 851(e)). The Commission is vested with quasijudicial functions. Persons aggrieved by its decisions in the exercise of those functions have a right of review by the United States courts of appeals.

Activities
Full and Fair Disclosure The Securities Act of 1933 (15 U.S.C. 77a) requires issuers of securities and their controlling persons making public offerings of securities in interstate commerce or through the mail to file with the Commission registration statements containing financial and other pertinent data about the issuer and the securities being offered. There are limited exemptions, such as government securities, nonpublic offerings, and intrastate offerings, as well as certain offerings not exceeding $1.5 million. The effectiveness of a registration statement may be refused or suspended after a public hearing if the statement contains material misstatements or omissions, thus barring sale of the securities until it is appropriately amended.

Regulation of Investment Advisers
Persons who, for compensation, engage in the business of advising others with respect to securities must register with the Commission. The Commission is authorized to define what practices are considered fraudulent or deceptive and to prescribe means to prevent those practices.

Regulation of Mutual Funds and Other Investment Companies
The Commission registers investment companies and regulates their activities to protect investors. The regulation covers sales load, management contracts, composition of boards of directors, and capital structure. The Commission must also determine the fairness of various transactions of investment companies before these actually occur. The Commission may institute court action to enjoin the consummation of mergers and other plans of reorganization of investment companies if such plans are unfair to securities holders. It also may impose sanctions by administrative proceedings against investment company management for violations of the act and other Federal securities laws and file court actions to enjoin acts and practices of management officials involving breaches of fiduciary duty and personal misconduct and to disqualify such officials from office.

Regulation of Securities Markets
The Securities Exchange Act of 1934 assigns to the Commission broad regulatory responsibilities over the securities markets, the self-regulatory organizations within the securities industry, and persons conducting a business in securities. Persons who execute transactions in securities generally are required to register with the Commission as broker-dealers. Securities exchanges and certain clearing agencies are required to register with the Commission, and associations of brokers or dealers are permitted to register with the Commission. The Act also provides for the establishment of the Municipal Securities Rulemaking Board to formulate rules for the municipal securities industry. The Commission oversees the selfregulatory activities of the national securities exchanges and associations, registered clearing agencies, and the Municipal Securities Rulemaking Board. In addition, the Commission regulates industry professionals, such as securities brokers and dealers, certain municipal securities professionals, government securities brokers and dealers, and transfer agents.

Rehabilitation of Failing Corporations
In cases of corporate reorganization proceedings administered in Federal courts, the Commission may participate as a statutory party. The principal functions of the Commission are to protect the interests of public investors involved in such cases through efforts to ensure their adequate representation, and to participate in legal and policy issues that are of concern to public investors generally.

Representation of Debt Securities Holders
The Commission safeguards the interests of purchasers of publicly offered debt securities issued pursuant to trust indentures.

Enforcement Activities
The Commission's enforcement activities are designed to secure compliance with the Federal securities laws administered by the Commission and the rules and regulations adopted thereunder. These activities include measures to do the following:

compel compliance with the disclosure requirements of the registration and other provisions of the relevant acts;
prevent fraud and deception in the purchase and sale of securities;
obtain court orders enjoining acts and practices that operate as a fraud upon investors or otherwise violate the laws;
suspend or revoke the registrations of brokers, dealers, investment companies, and investment advisers who willfully engage in such acts and practices;
suspend or bar from association persons associated with brokers, dealers, investment companies, and investment advisers who have violated any provision of the Federal securities laws; and
prosecute persons who have engaged in fraudulent activities or other willful violations of those laws. In addition, attorneys, accountants, and other professionals who violate the securities laws face possible loss of their privilege to practice before the Commission. To this end, private investigations are conducted into complaints or other indications of securities violations. Evidence thus established of law violations is used in appropriate administrative proceedings to revoke registration or in actions instituted in Federal courts to restrain or enjoin such activities. Where the evidence tends to establish criminal fraud or other willful violation of the securities laws, the facts are referred to the Attorney General for criminal prosecution of the offenders. The Commission may assist in such prosecutions. VerDate Aug 04 2004 12:29 Jul 19, 2006 Jkt 206692 PO 00000 Frm 00429 Fmt 6997 Sfmt 6995 C:\GOVMAN\206-692\206692.063 APPS10 PsN: 206692