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The history and mission of the U.S. Securities and Exchange

On Behalf of | Nov 1, 2019 | Firm News, General Legal Information |

The history and mission of the U.S. Securities and Exchange

Say “Wall Street” to anyone and you’ll probably hear the words “money,” “stocks,” “brokers,” and even “greed” as a response. To those who don’t interact with the stock market, investing and purchasing stock can seem like a lawless wild west.

Thankfully, the U.S. Securities and Exchange Commission exists to protect Americans and give investors a fair chance at making money in the stock market.

“The SEC oversees the key participants in the securities world, including securities exchanges, securities brokers and dealers, investment advisers, and mutual funds,” the SEC says on its website. “Crucial to the SEC’s effectiveness in each of these areas is its enforcement authority. Each year the SEC brings hundreds of civil enforcement actions against individuals and companies for violation of the securities laws. Typical infractions include insider trading, accounting fraud, and providing false or misleading information about securities and the companies that issue them.”

The SEC was created in the wake of the Great Crash of 1929, when the stock market crashed and gave way to the Great Depression. Those who became prosperous in the 1920’s through the stock market were penniless after the crash, causing people to lose confidence in buying stock. To get people to invest in the stock market once again, Congress passed the Securities Act of 1933 and the Securities Exchange Act of 1934. Based on these two acts, the SEC’s mission became:

  • Ensuring companies publicly offering securities for investment dollars must tell the truth about their businesses, the securities they are selling, and the risks involved to purchasers.
  • Brokers and dealers must be fair and honest to investors and put their interests ahead of businesses.

Click here to learn what the SEC’s major responsibilities are.