US Securities and Exchange Commission (SEC)

Definition

The US Securities and Exchange Commission (SEC) is a federal agency responsible for regulating the securities industry and enforcing securities laws. It aims to protect investors, maintain fair and efficient markets, and facilitate capital formation.

5 Must Know Facts For Your Next Test

1. The SEC was established by the Securities Exchange Act of 1934.
2. It has five commissioners appointed by the President, with no more than three from the same political party.
3. One of its primary functions is to oversee brokerage firms, transfer agents, and clearing agencies.
4. The SEC requires public companies to disclose financial information regularly.
5. Its enforcement division investigates violations like insider trading and accounting fraud.

Review Questions

• What year was the SEC established?
• How many commissioners does the SEC have?
• Name one primary function of the SEC.

Related terms

Securities Act of 1933: A law enacted to ensure more transparency in financial statements so investors can make informed decisions about investments.

Insider Trading: The illegal practice of trading on the stock exchange to one's own advantage through having access to confidential information.

NYSE (New York Stock Exchange): One of the largest stock exchanges in the world where stocks, bonds, and other securities are bought and sold.