The U.S. Securities and Exchange Commission (SEC) is an independent federal agency charged with regulating the securities markets and protecting investors. Its mission is to promote fair, orderly and efficient markets by enforcing federal securities laws, requiring public companies to disclose material information, and supervising market infrastructure and certain financial professionals.

Structure and main functions

The SEC is led by a commission of bipartisan commissioners, including a Chair, appointed by the President and confirmed by the Senate. Its work is organized into divisions and offices that carry out rulemaking, registration, examination and enforcement.

  • Major divisions: Corporation Finance; Trading and Markets; Investment Management; Enforcement; Economic and Risk Analysis.
  • Regulatory activities: drafting rules, reviewing registration statements and periodic reports, conducting examinations and investigations.

The SEC was created by the Securities Exchange Act of 1934 in the wake of the 1929 market crash and the 1930s reforms that sought to restore investor confidence. It operates under a framework of federal statutes including the Securities Act of 1933, the Securities Exchange Act of 1934, the Investment Company Act of 1940 and the Investment Advisers Act of 1940.

Roles, examples and importance

Practical functions include reviewing registration statements for public offerings, enforcing rules against insider trading and market manipulation, and overseeing exchanges and self-regulatory organizations. The SEC’s disclosure requirements (for example, annual 10-K reports) help investors assess company performance and risk.

Distinctive features and relationships

Although independent from executive departments, the SEC’s commissioners are presidentially appointed. It supervises self-regulatory organizations (such as stock exchanges and FINRA) rather than replacing them, and uses both rulemaking and civil enforcement to carry out its mandate.