Securities and Exchange Commission

US organization whose primary aim is to protect investors and maintain the integrity of the US securities (stocks and bonds) and financial markets. The SEC requires public companies to disclose relevant, meaningful, financial, and other, information to the public. It oversees key participants in the investment world, including brokers, dealers, investment advisers, mutual funds, and stock exchanges. The SEC also acts an enforcement agency. The SEC was established in 1934 following the enactment of the Securities Act 1933, and the Securities Exchange Act 1934, designed to restore investor confidence in the wake of the Wall Street crash and the ensuing depression. The first chairman was Joseph P Kennedy, the father of US president John F Kennedy.

The SEC, created in the wake of the 1929 stock market crash, operates under several major statutes. The Securities Act of 1933 is concerned with the accuracy of registration statements, made when a firm goes public and stock is offered for sale. The Securities Exchange Act of 1934 regulates trading in securities after they have been issued. The Investment Company Act 1940 regulates mutual funds, and the Investment Advisors Act of 1940 registers investment advisors.

The SEC is also an impartial advisor to federal courts in bankruptcy cases involving publicly-held corporations. Since 1988, the SEC has been authorized to pay bounties for information leading to the conviction of inside traders.