Securities and Exchange Commission (SEC) Definition
The Securities and Exchange Commission (SEC) is a federal government agency in the United States granted with the authority to regulate, oversee, and enforce the nation’s securities markets. It was created to help protect investors from fraudulent activities and ensure the integrity of the market.
Securities and Exchange Commission (SEC) Key Points
- The SEC aims to protect investors and maintain fair, orderly, and efficient markets.
- It oversees all key participants in the securities world including securities exchanges, securities brokers and dealers, investment advisors, and mutual funds.
- In the crypto world, the SEC determines whether a cryptocurrency is a security or not and regulates Initial Coin Offerings (ICOs).
What is the Securities and Exchange Commission (SEC)?
The SEC is a federal regulatory body established by the U.S. Congress in response to the stock market crash of 1929. Its key role is to prevent excessive speculation, protect investors, ensure fair dealing of securities and promote transparency in the market.
Why does the SEC exist?
The SEC exists to reduce instances of fraud, insider trading, and other illegal activities in the securities markets. By regulating capital markets and enforcing rules, the SEC aims to provide safety and fairness to investors, maintain confidence in the market, and foster capital formation.
Where does the SEC exert its power?
The SEC exerts its power on securities markets within the United States. Its jurisdiction extends over all securities-related issues in the country, including crypto-assets that fall under the category of “securities.”
When does the SEC step in?
The SEC steps in when there’s a suspicion of fraudulent or illegal activities involving securities within its jurisdiction. It also intervenes when new securities products or offerings, such as initial coin offerings (ICOs) or token sales, conform to the definition of a “security” and need to comply with financial regulations.
Who is regulated by the SEC?
The SEC regulates all participants in the securities industry, including brokers and dealers, securities exchanges, investment advisors, mutual funds, and public companies. In the crypto world, any cryptocurrency that’s defined as a security, or any firms dealing with such assets, falls under the SEC’s purview.
How does the SEC operate?
The SEC operates by enforcing securities laws, promulgating rules and regulations concerning securities, and supervising the securities industry. It achieves this through inspection, investigation, and enforcement actions.
