SEC

The **U.S. Securities and Exchange Commission** (commonly known as the **SEC**) is an [|independent agency of the United States government] which holds primary responsibility for enforcing the federal securities laws and regulating the [|securities] industry, the nation's stock and options exchanges, and other electronic securities markets. The SEC was created by section 4 of the [|Securities Exchange Act of 1934]. In addition to the 1934 Act that created it, the SEC enforces the [|Securities Act of 1933], the [|Trust Indenture Act of 1939], the [|Investment Company Act of 1940], the [|Investment Advisers Act of 1940], the [|Sarbanes-Oxley Act of 2002] and other statutes. The SEC is composed of five commissioners, of which no more than three can be from a single political party. Currently the SEC commissioners are chair [|Mary Schapiro], [|Kathleen L. Casey], [|Troy A. Paredes], [|Luis A. Aguilar] and [|Elisse B. Walter].

The SEC was established by the [|United States Congress] in [|1934] as an independent, [|non-partisan], [|quasi-judicial] regulatory [|agency] during the [|Great Depression] that followed the [|Crash of 1929]. The main reason for the creation of the SEC was to regulate the [|stock market] and prevent corporate abuses relating to the offering and sale of securities and corporate reporting. The SEC was given the power to license and regulate stock exchanges, the companies whose securities traded on them, and the brokers and dealers who conducted the trading. Currently, the SEC is responsible for administering seven major laws that govern the securities industry. They are: the [|Securities Act of 1933], the [|Securities Exchange Act of 1934], the [|Trust Indenture Act of 1939], the [|Investment Company Act of 1940], the [|Investment Advisers Act of 1940], the [|Sarbanes-Oxley Act of 2002] and most recently, the Credit Rating Agency Reform Act of 2006. The enforcement authority given by Congress allows the SEC to bring civil enforcement actions against individuals or [|companies] found to have committed accounting [|fraud], provided false information, or engaged in [|insider trading] or other violations of the [|securities law]. The SEC also works with [|criminal law enforcement agencies] to prosecute individuals and companies alike for offenses which include a criminal violation. To achieve its mandate, the SEC enforces the statutory requirement that [|public companies] submit quarterly and [|annual reports], as well as other periodic reports. In addition to annual [|financial reports], company executives must provide a [|narrative] account, called the "management discussion and analysis" (MD&A), that outlines the previous year of operations and explains how the company fared in that time period. Management will usually also touch on the upcoming year, outlining future goals and approaches to new projects. In an attempt to level the playing field for all investors, the SEC maintains an online database called [|EDGAR] (the Electronic Data Gathering, Analysis, and Retrieval system) [|online] from which investors can access this and other information filed with the agency. Quarterly and annual reports from public companies are crucial for investors to make sound decisions when investing in the capital markets. Unlike [|banking], [|investment] in the capital markets is not [|guaranteed] by the federal government. The potential for big gains needs to be weighed against equally likely losses. Mandatory disclosure of financial and other information about the issuer and the security itself gives private individuals as well as large institutions the same basic facts about the public companies they invest in, thereby increasing public scrutiny while reducing insider trading and fraud. The SEC makes reports available to the public via the EDGAR system. SEC also offers publications on investment-related topics for public education. The same online system also takes tips and complaints from investors to help the SEC track down violators of the securities laws.

What is the responsibility of the SEC? A) enforcing the federal securities laws B) regulating the nation's stock and options exchanges C) regulating electronic securities markets D) all of the above
 * Test Question**