What is the role of the SEC?What is the role of the SEC?

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Ashley Kannan eNotes educator| Certified Educator

The SEC's primary responsibility is to make sure that business practices are legal and transparent in terms of being accessible to the stockholders of a corporation as well as to the public.  They police how businesses regulate themselves and how businesses conduct transactions.  In their focusing on stock transactions, the SEC pays attention to any potential irregularities that might be happening in the purchasing and selling of stock and seeks to expose anything that might be financially improper or seeking to make money at the cost of one over another.  With input from Justice Brandeis, the SEC was created in the wake of financial misdeeds from corporations in the 1920s, one of the reasons for the Stock Market Crash of 1929.  In this light, one can see that the reason for the SEC's forming was to protect consumer from industrial greed and corporate malfeasance.

pohnpei397 eNotes educator| Certified Educator

The acronym SEC stands for Securities and Exchange Commission.  The basic role of this agency is to ensure that the stock markets operate in a way that is fair to all investors.

One of the major things that the SEC is supposed to do is to prevent insider trading.  In insider trading, people who know what is going to happen with some business (like that it is going to merge with some other business) use that knowledge to know whether to buy or sell stocks in those firms.  This is unfair because it allows them to make profits by exploiting information that is not available to all people.

So, the SEC is supposed to ensure that the markets will be fair by preventing such things as insider trading.

litteacher8 eNotes educator| Certified Educator

It used to be believed that the SEC could police the stock market and everything would be fine.  The financial crisis and economic downturn have led many people to question the SEC's effectiveness as a watchdog.  Many people believe that the SEC is the fox guarding the henhouse.  The rules are not strict enough to prevent dishonest behavior.  What is illegal is not necessarily ethical or moral.

lrwilliams eNotes educator| Certified Educator

The SEC is most commonly associated with policing Wall Street. They  make certain that trades that are made are done legally and monitor for any irregularities that may occur.

krishna-agrawala | Student

The acronym SEC is the U.S. Securities and Exchange Commission. The official site of this organisation referred below describes their role as:

... to protect investors, maintain fair, orderly, and efficient markets, and facilitate capital formation.

Various activities of the SEC to achieve the above states aims include:

  • Interpretation of federal securities laws
  • Issue and amend rules under the overall framework of these laws.
  • Supervise and inspect operations of securities firms, brokers, investment advisers, and rating agencies.
  • Oversee work of private regulatory organizations in the field of securities, acounting and auditing.
  • Coordinate securities regulations of U.S. federal and state governments and other countries.
william1941 | Student

Established in 1934, the SEC or the Securities and Exchange Commission is an independent agency established to enforce federal securities laws. The purpose of the SEC is primarily to ensure that the securities markets operate in an orderly manner and all dealings are fair to ensure investors are not cheated. The SEC does not ensure that investors will always make a profit from the Stock markets. It only ensures that they are provided with the right information. This includes financial information about the businesses carried out by companies, disclosure of share holding and sale and purchase of shares. It also tries to see that there is no price manipulation by large traders so that smaller retail investors are protected.