Which economic crisis led to the creation of the SEC?

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pohnpei397 eNotes educator| Certified Educator

The SEC is the Securities and Exchange Commission.  The purpose of this agency is to protect people who invest in stocks, bonds, and the like.  The SEC is supposed to do this by ensuring that the markets are open and honest.  The SEC was created in 1934 in response to the events and conditions that led to the Great Depression.

In the time leading up to the stock market crash of 1929 and the Great Depression, there were few laws regulating the stock markets.  For example, firms could and did sell stocks that had very little basis in reality; ones that were essentially worthless.  There were no laws to prevent this sort of fraud.  This sort of thing helped to lead to the crash and the Depression.

In response to the crash and the Depression, the SEC was created.