What does the Security and Exchange Commission do to help people?

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readerofbooks eNotes educator| Certified Educator

This is a great question and one that is important for today's culture. The Security and Exchange Commission (SEC) is a federal agency that makes sure that the stock markets and companies operate in an ethical manner. Therefore, they make sure that investors, companies and others involved in securities operate by the rules. 

Recently in the past few years the SEC has been in the news a lot due to the topic of insider trading. Insider trading takes place when certain investors have unfair information before others that influences the buying or selling of stocks. For example, Rajat Gutpa has been in the news for insider trading, as he tipped off his colleagues about advantageous investing opportunities. In the past, Martha Stewart even got in trouble for insider trading. SEC regulations protect the public, because money can be made unfairly through insider trading, which would enable unscrupulous gain in wealth.  

The SEC also enforces securities regulations affecting corporations through implementing administrative action. This is especially important in view of what has been taking place at the banks. The idea that banks are too big to fail is a moral hazard. Two days ago, JPMorgan Chase confessed to making high-risk derivative investments that cost the bank $2 billion dollars. An FBI probe has been launched. The SEC's main role in helping people is to investigate securities regulations that are enforced by the Justice Department.