What Does the U.S. Securities and Exchange Commission (SEC) Do?

History

A negative impact on the United States economy resulted from an increase in investing in the stock market after World War I, the stock market crash in 1929, and the Great Depression. President Franklin D. Roosevelt worked closely with Congress to pass the Securities Act of 1933 and the Securities Exchange Act of 1934, which led to the creation of the SEC. Roosevelt appointed Joseph P. Kennedy, father to future President John F. Kennedy, as the first commissioner of the SEC.

To learn more about the history of the Securities and Exchange Commission, visit the SEC Historical Society’s Web site at www.sechistorical.org/index.php.

Current SEC Responsibilities

--      Interpretation of federal securities laws, including issuance of new rules and amendment of existing rules

--      Power to register, regulate, and oversee brokerage firms, transfer agents, clearing agencies, and self-regulatory organizations (SROs). Stock exchanges like the New York Stock Exchange and American Stock Exchange are SROs. The National Association of Securities Dealers, which operates the National Association of Securities Dealers Automated Quotations (NASDAQ) system, is also an SRO.

--      Authority to identify and prohibit certain types of conduct in the markets

--      Coordination of United States securities regulation with federal, state, and foreign authorities

--      Discipline for regulated entities and persons associated with the markets

--      Requirement for periodic reporting of information by companies with publicly-traded securities

--      Power to approve stock exchange rules and prohibit manipulative trading practices

Structure

The president appoints five commissioners to the SEC with the advice and consent of the United States Senate. Their terms last five years and are staggered so that one commissioner's term ends on June 5 each year. To make sure the SEC remains non-partisan, no more than three commissioners can be affiliated with the same political party. A chairman is designated by the president and is considered the top SEC executive. The four divisions and 19 offices are located in Washington, DC, with an additional 11 regional offices.

To learn more about the SEC, visit its Web site at http://www.sec.gov/index.htm.