The Securities and Exchange Commission (SEC) is the regulatory authority for financial markets in the United States. Created in 1934 in the wake of the Great Depression and the financial scandals that shook confidence in the US stock market, the SEC’s primary mission is to protect investors, maintain a fair and transparent financial market, and facilitate capital formation for businesses. The SEC plays an essential role in regulating one of the world’s largest financial markets.
One of the SEC’s core functions is to oversee the U.S. stock markets, including the New York Stock Exchange (NYSE) and NASDAQ, as well as other exchanges. It ensures that listed companies comply with strict standards of financial disclosure. Companies must provide complete, accurate and transparent information to their shareholders, enabling investors to make informed decisions. This mission is governed by laws such as the Securities Act of 1933 and the Securities Exchange Act of 1934, which introduced major reforms to securities regulation in the United States.
The SEC is also responsible for enforcing laws against financial crimes, such as insider trading, securities fraud and market manipulation. It has extensive investigative powers and can prosecute individuals or companies suspected of violating the rules. For example, major cases of financial fraud, such as the Enron affair in the early 2000s or the Bernie Madoff scam, have highlighted the SEC’s key role in detecting and punishing illegal financial activities.
When it comes to investor protection, the SEC stands out for its educational role. It provides individual investors with resources and tools to help them understand the risks associated with different financial products and recognize the signs of fraud. The “Investor.gov” program launched by the SEC is a concrete example of this educational mission. It helps investors navigate the complex world of financial markets, while providing crucial information on their rights and protections.
Another key aspect of the SEC’s mission is the review and approval of initial public offerings (IPOs). When a company wishes to go public and offer its shares to the public, it must submit a detailed prospectus to the SEC, which analyzes the information provided to ensure its accuracy and transparency. This process is crucial to ensure that investors have the data they need to assess the risks associated with buying the company’s shares.
The SEC also regulates investment funds, investment advisors and brokers, ensuring that they comply with legal standards and act in the best interests of their clients. In this sense, it is responsible for enforcing regulations stemming from the Dodd-Frank Act, passed after the 2008 financial crisis, which aims to strengthen consumer protection and prevent abuses in the financial sector.
In recent years, the SEC has been faced with new challenges linked to the rapid evolution of financial technologies, notably the rise of cryptocurrencies and fintechs. Regulation of Initial Coin Offerings (ICOs) and oversight of crypto-asset trading platforms are now among its priorities, as the SEC seeks to establish a clear and consistent legal framework for these new financial instruments, while protecting investors from risk and fraud in this rapidly expanding sector.
Finally, as the US regulator, the SEC works with other global financial regulators to harmonize international rules and standards. It actively participates in the work of the International Organization of Securities Commissions (IOSCO) and the Financial Stability Board (FSB), ensuring that the United States plays a leading role in the global regulation of financial markets.
