The United States Securities and Exchange Commission (SEC) is a quasi independent agency of the United States federal government, created in the aftermath of the Wall Street crash of 1929. Its primary purpose is to enforce laws against market manipulation.

Created by Section 4 of the Securities Exchange Act of 1934 (now codified as and commonly referred to as the Exchange Act or the 1934 Act), 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, and the Sarbanes–Oxley Act of 2002, among other statutes.

Overview

The SEC has a three-part mission: to protect investors; maintain fair, orderly, and efficient markets; and facilitate capital formation.

To achieve its mandate, the SEC enforces the statutory requirement that public companies and other regulated entities submit quarterly and annual reports, as well as other periodic disclosures. 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. MD&A usually addresses the upcoming year, outlining future goals and approaches to new projects.

Quarterly and semiannual reports from public companies are crucial for investors to make sound decisions when investing in capital markets. Unlike banking, investment in capital markets is not guaranteed by the federal government. The potential for large gains needs to be weighed against that of sizable 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 fundamental facts about the public companies they invest in, thereby increasing public scrutiny while reducing insider trading and fraud.

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) from which investors can access information filed with the agency, such as reports. The same online system also accepts tips and complaints from investors to help the SEC track down violators of the securities laws, as well as offering publications on investment-related topics for public education. The SEC maintains a strict policy of refraining from commenting on the existence or status of any ongoing investigation.

History Background Prior to the enactment of the federal securities laws and the creation of the SEC, securities trading was governed by so-called blue sky laws. These laws were enacted and enforced at the state level and regulated the offering and sale of securities to protect the public from fraud. Though the specific provisions of these laws varied among states, they all required the registration of all securities offerings and sales, as well as of every U.S. stockbroker and brokerage firm. However, blue sky laws were generally considered ineffective. For example, as early as 1915, the Investment Bankers Association told its members that they could circumvent blue sky laws by making securities offerings across state lines through the mail.

Founding

The SEC's authority was established by the Securities Act of 1933 and Securities Exchange Act of 1934; both laws are considered parts of Franklin D. Roosevelt's New Deal program.

After the Pecora Commission hearings on abuses and frauds in securities markets, Congress passed the Securities Act of 1933 (), which federally regulates original issues of securities across state lines, primarily by requiring that issuing companies register distributions prior to sale so that investors may access basic financial information and make informed decisions. For the first year of the law's enactment, the enforcement of the statute rested with the Federal Trade Commission.

The subsequent Securities Exchange Act of 1934 () regulates secondary markets for securities. The 1934 Act regulates secondary trading between individuals and companies which are often unrelated to the original issuers of securities. Entities under the SEC's authority include securities exchanges with physical trading floors such as the New York Stock Exchange, self-regulatory organizations, the Municipal Securities Rulemaking Board, NASDAQ, alternative trading systems, and any other persons engaged in transactions for the accounts of others. Section 4 of the 1934 Act transferred the FTC's enforcement authority under the 1933 Act to the newly created Securities and Exchange Commission and tasked the new commission with enforcing both acts.

In 1934, Roosevelt named his friend Joseph P. Kennedy, a self-made multimillionaire, financier, and leader among the Irish-American community, as chairman of the SEC. Roosevelt chose Kennedy partly based on his experience on Wall Street.David Nasaw, The Patriarch: The Remarkable Life and Turbulent Times of Joseph P. Kennedy (2012), pp. 204–37. Two of the other five commissioners were James M. Landis and Ferdinand Pecora. Kennedy added a number of intelligent young lawyers to the SEC staff, including William O. Douglas and Abe Fortas, both of whom later became Supreme Court justices.Nassau, The Patriarch, pp. 226–28

Another of Kennedy’s early appointees was David Saperstein, a former associate counsel to the Pecora Commission who helped draft the Securities Exchange Act of 1934. As the SEC’s first Director of the Division of Trading and Exchange, Saperstein oversaw the registration of brokers and dealers, the creation of the first federal rules for over-the-counter markets, and issued early policy interpretations—such as the 1937 "Saperstein Interpretation"—that shaped the Commission’s approach to market structure and conflicts of interest.

Kennedy's team defined four missions for the new commission: (1) to restore investor confidence in the securities market, which had practically collapsed; (2) to restore integrity to securities markets by prosecuting and eliminating fraudulent and unsound practices targeting investors; (3) to end million-dollar insider trading by top officials of major corporations; and (4) to establish a complex and universal system of registration for securities sold in America, with a clear-cut set of deadlines, rules and guidelines. The SEC succeeded; Kennedy reassured the American business community that they would no longer be deceived and tricked and taken advantage of by Wall Street. He became a cheerleader for ordinary investors to return to the market and enable the economy to grow again.

Later SEC commissioners and chairmen include William O. Douglas, Jerome Frank, and William J. Casey.

Since 1994, most registration statements (and associated materials) filed with the SEC can be accessed via the SEC's online system, EDGAR.

21st century In 2019, the Securities and Exchange Commission Historical Society introduced an online gallery to illustrate changes in the US securities market structure since the 1930s. The online gallery features a narrative history supported by dozens of documents, papers, interviews, photos and videos.

List of chairs

Portrait Name State of residency Term of office Appointed by Term start Term end Time in office1 MassachusettsJune 30, 1934September 23, 1935 Roosevelt2 MassachusettsSeptember 23, 1935September 15, 1937 3 ConnecticutAugust 17, 1937April 15, 1939 4 IllinoisMay 18, 1939April 9, 1941 5 IowaApril 9, 1941January 20, 1942 6 January 20, 1942June 30, 1946 7 July 23, 1946December 31, 1947 Truman8 New YorkMay 18, 1948November 3, 1949 9 November 4, 1949February 25, 1952 10 Michigan February 26, 1952June 17, 1953 11 PennsylvaniaJune 27, 1953May 25, 1955 Eisenhower12 New YorkMay 25, 1955June 27, 1957 13 Massachusetts August 20, 1957March 26, 1961 14 March 27, 1961August 20, 1964 Kennedy15 August 20, 1964February 22, 1969 Johnson16 IdahoFebruary 22, 1969January 2, 1971 Nixon17 New YorkApril 14, 1971February 2, 1973 18 NebraskaMarch 3, 1973May 16, 1973 19 IllinoisAugust 6, 1973October 28, 1975 20 CaliforniaOctober 28, 1975April 10, 1977 Ford21 CaliforniaApril 18, 1977March 1, 1981 Carter22 May 6, 1981June 18, 1987 Reagan23 IllinoisAugust 7, 1987September 30, 1989 24 New YorkOctober 11, 1989May 7, 1993 Bush Sr.– (acting)New YorkMay 7, 1993July 27, 1993 Clinton25 New YorkJuly 27, 1993February 9, 2001 26 New YorkAugust 3, 2001February 18, 2003 Bush Jr.27 New YorkFebruary 18, 2003June 30, 2005 28 CaliforniaAugust 3, 2005January 20, 2009 29 New YorkJanuary 27, 2009December 14, 2012 Obama30 New YorkDecember 14, 2012April 10, 2013 31 New YorkApril 10, 2013January 20, 2017 – (acting)Washington D.C.January 20, 2017May 4, 2017 Trump32 New YorkMay 4, 2017December 23, 2020 – (acting)MaineDecember 24, 2020January 20, 2021 – (acting)Washington D.C.January 20, 2021April 17, 2021 Biden33 MarylandApril 17, 2021January 20, 2025 – (acting)CaliforniaJanuary 20, 2025April 21, 2025 Trump34VirginiaApril 21, 2025Present

Organizational structure Commission members

The commission has five commissioners appointed by the president of the United States. No more than three commissioners may belong to the same political party. Their five-year terms are staggered so that one commissioner's term ends on June 5 each year. Service may continue for up to 18 additional months past term expiration.

The president also designates one commissioner as chairman, the SEC's top executive. However, the president does not possess the power to fire the appointed commissioners, a provision that was made to ensure the independence of the SEC. This issue arose during the 2008 financial crisis and the John McCain 2008 presidential campaign.

Current commissioners The current board members : Position Name Party Took office Term expires Chair Republican Member Republican Member Republican Member Vacant Member Vacant

Divisions

Within the SEC, there are six divisions, which is headquartered in Washington, D.C.

The SEC's divisions are: U.S. Securities and Exchange Commission Corporation Finance Trading and Markets Investment Management Enforcement Economic and Risk Analysis Examinations

Corporation Finance is the division that oversees the disclosure made by public companies, as well as the registration of transactions, such as mergers, made by companies. The division is also responsible for operating EDGAR.

The Trading and Markets division oversees self-regulatory organizations (SRO's) such as the Financial Industry Regulatory Authority (FINRA) and Municipal Securities Rulemaking Board (MSRB) and all broker-dealer firms and investment houses. This division also interprets proposed changes to regulations and monitors operations of the industry. In practice, the SEC delegates most of its enforcement and rulemaking authority to FINRA. In fact, all trading firms not regulated by other SROs must register as a member of FINRA. Individuals trading securities must pass exams administered by FINRA to become registered representatives.

The Investment Management Division oversees registered investment companies, which include mutual funds, as well as registered investment advisors. These entities are subject to extensive regulation under various federal securities laws.Lemke and Lins, Regulation of Investment Advisers (Thomson West, 2013 ed.); Lemke, Lins and Smith, Regulation of Investment Companies (Matthew Bender, 2013 ed.). The Division of Investment Management administers various federal securities laws, in particular, the Investment Company Act of 1940 and Investment Advisers Act of 1940. This division's responsibilities include: assisting the commission in interpreting laws and regulations for the public and SEC inspection and enforcement staff; responding to no-action requests and requests for exemptive relief; reviewing investment company and investment adviser filings;