The United States Securities and Exchange Commission (SEC) is an independent body created for the regulation of securities. It also serves to protect investors and keep an eye on financial activities of corporations, such as the sale of securities and takeovers. It is headed by five presidential appointees who serve as its commissioners, and is divided into four main divisions, which are Corporation Finance, Trading and Markets, Investment Management, and Enforcement.
The SEC acts as an enforcement agency for securities laws. It seeks not only to uphold national investment acts, but federal statutes as well. As such, the offering of stocks and other options should, more often than not, be registered with the SEC. The agency then issues the necessary licenses to companies, brokers, as well as dealers who trade in the stock market.
Risk-taking is definitely one of the hazards of the job for investors, as any potential gain is offset with the possibility of major loss. The SEC facilitates processes which minimize unnecessary worry.
Companies must submit quarterly and annual reports to the SEC, which ensures that there is transparency in the interest of protecting investors. These reports provide vital information to both individual investors and institutions before they make investment decisions.
In this way, the SEC’s full disclosure policy also ensures that the necessary checks to avoid insider trading, manipulation, and fraud are set in place. With the installation of necessary safety nets against corporate abuse, investors are able to make more informed and financially sound decisions.
