The Role of the U.S. Securities and Exchange Commission

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Table of Contents

Introduction
Main body
Conclusion
Reference

Introduction

The U.S. Securities and Exchange Commission, more commonly known as the SEC, primarily serves the purposes of protecting investors and ensuring that the market is fair to every participant. Stable economic growth is only possible if the market encourages and rewards research. Investing is a risky activity that does not guarantee success, and one can only achieve profits if he or she is well prepared before beginning.

However, research and analysis are meaningless if the information gained during the study is invalid, which makes dishonesty dramatically reduce the attractiveness of the activity. Therefore, an authority that would inspect and confirm or deny the integrity of information becomes necessary. The SEC exists to monitor the transparency and accurateness of financial reporting and to guarantee that every participant on the market has access to the same set of correct data.

Main body

The SEC accomplishes the goal of data set formation by having each company publish specific information and verifying its integrity. The statements are then pooled together and made available to all investors, allowing them to make informed decisions about their further actions in the market. Furthermore, “the SEC oversees the key participants in the securities world, including securities exchanges, securities brokers and dealers, investment advisors, and mutual funds,” ensuring fair dealing and fraud protection (“What we do”, 2013, para. 8).

However, it should be noted that the SEC is not the only institution that oversees and controls the market, although it can be considered the primary government agency in the field (“What we do”, 2013). It accomplishes the goals above through the use of the enforcement authority granted to it by the government.

The SEC has the power to bring civil enforcement actions against individuals and companies that break security laws. “Typical infractions include insider trading, accounting fraud, and providing false or misleading information about securities and the companies that issue them,” although other, rarer variations exist (“What we do”, 2013, para. 9). As the SEC is incapable of closely inspecting the activities of all companies in the market at once, it tends to use information that is provided by investors heavily.

To ensure the accuracy and correctness of that information, the Commission offers online educational resources that describe disclosure documents, proper business practices, and some of the more common violations. In addition, the SEC cooperates with other institutions, such as Congress, state securities regulators, and private sector organizations, and exchanges information with them.

Conclusion

The SEC’s primary goal is to ensure that the field of securities is fair, with all participants having access to a basic information pool that is accurate and sufficient to make informed decisions. The information is collected from all public companies, and the Commission verifies its integrity through a variety of mediums, such as investigations and investor reporting. Fraud protection is a significant part of the SEC’s activities, and the organization uses the executive power granted to it to combat law violations.

The ultimate result of the policies is an efficient and transparent flow of capital that stimulates the economy and allows the participants to extract profits while minimizing risks, making investing a more attractive activity. The SEC is not the only government institution that oversees and influences the securities market, but it is the central agent in the field, and the transparency of financial reporting is mostly enforced through its activities.

Reference

What we do. (2013). Web.

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The Role of the U.S. Securities and Exchange Commission

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