The Structure of the SEC
The central securities regulations are administered by the United States Securities and Exchange Commission, an independent, nonpartisan judicial body in the United States. The main goal of the laws is to protect people who engage in the securities market from dishonest practices like fraud. The laws' purpose is to guarantee that there is fair rivalry and that investors have access to all relevant information about openly traded securities. The congregational investigation that followed the 1929 stock market crash and ensuing economic collapse served as the impetus for the commission's creation. The investors lost due to non-disclosure of relevant information and misrepresentation of the financial reporting. The essay shall focus on discussing the structure of the SEC (Staff SEC 1-2).
Establishment of the SEC
Established under the Securities Exchange Act by the Congress in the year 1934, the SEC is comprised of five commissioners that are selected by the president of the U.S. with the approval of the Senate. Every commissioner has a term of five years, and the terms are arranged in a manner to ensure that only one ends on the fifth of June annually. One among the five officials is appointed chair by the president at his discretion. It is a requirement that three of the five commissioners should have similar political inclinations to that of the head of state. After that, SEC employs its own professionals such as accountants, lawyers, investigators, examiners, economists among others who help it in carrying out its responsibilities (Johnston and Reining 1-2).
Divisions within the SEC
Principally the commission is divided into the division of enforcement, market regulation, corporate finance, investment management, and the office of compliance examination and inspection. The division of corporate finance has the general responsibility of making sure that the required disclosures are met in particular by the public companies registered with SEC. The division's responsibilities are to review the registration statements as well as the other documents that relate to mergers and acquisition, solicitation, proxies, and the tender offers (SEC 21844-21849).
The market regulation division is the one responsible for the overseeing of the self-regulatory organizations, for example, the nation's stock exchange and the securities market. It oversees the regulation and registration of brokerage firms and other market participants inclusive of the clearing organization and transfer agents. Lastly, it sets the financial responsibility standards and ensures adherence to the sales practices that affect the operation of the securities market (SEC 2173-21874).
The enforcement division has a responsibility for implementing the securities of the federal government. The responsibility includes the investigation into the possible violation of the federal government laws and giving recommendations on the appropriateness of the remedies put forward for further consideration by the Commission. Through this division four hundred to five hundred civil enforcements are brought fought annually against both companies and individuals who are suspected of breaking the law (SEC 21875-21899).
The investment division is put in place for the administration of three edicts: the Investment Advisers Act of 1940, Investment Company Act, and the Public Utility Holding Company Act of 1935 (SEC n.p). It ensures that there is complete compliance with the regulations regarding financial responsibility, registration, advertising of the investment advisers and companies, and the sales practices. The employees review from time to time and process the proxy statements, registration statement, and the periodic reports within the confines of the law. Lastly, the office of the compliance examinations and inspections coordinates and conducts all the inspection compliance programs of the brokers, clearing agencies, advisers, transfer agents, investment companies, and the self-regulatory organizations. It determines whether the goals are in line with the goals of protecting the investors and compliance with the federal securities laws (SEC 21900-21925).
Works Cited
Staff SEC. "SEC Divisions Homepages. SEC.gov U.S. Securities and Exchange Commission. Web 11 Feb. 2017. (accessed June 12, 2017)
Johnston, Rick, and Reining, Petacchi. "Regulatory Oversight of Financial Reporting: Securities and Exchange Commission Comment Letters." (2015).
(accessed June 12, 2017).
Securities and Exchange Commission (SEC). "Amendments for Small and Additional Issues Exemptions under the Securities Act (Regulation A)." Final Rule, Federal Register 80.75 (2015): 21806-21925.
Securities, U. S. "Exchange Commission (SEC)." Acceleration of Periodic Report Filing Dates and Disclosure Concerning Website Access to Reports. USA: SEC, September 5, 2015.
