Securities and Exchange Commission

definition

The SEC was established in 1934 under the Securities Exchange Act of 1934. Its responsibilities include formulating securities market regulations, approving company listing applications, supervising the operations of securities firms and exchanges, and combating securities fraud and insider trading.

Core Functions

• Investor protection: ensuring investors obtain true and comprehensive financial and operational information;

• Information disclosure supervision: requires listed companies to submit financial reports and interim information such as 10-K, 10-Q, and 8-K;

• Law enforcement and investigation: investigating fraud, insider trading, market manipulation and other illegal activities;

• Regulate market participants: such as securities firms, investment advisors, asset management companies, exchanges, etc.;

• Promote the healthy development of the capital market.

Organizational Structure

The SEC, headquartered in Washington, D.C., has five commissioners (including the chair), nominated by the president and confirmed by the Senate for five-year terms, ensuring a bipartisan balance of power. The SEC comprises several law enforcement and regulatory divisions, including the Division of Corporation Finance, the Division of Trading and Markets, and the Division of Investment Management.

Scope of supervision

• Public Company

• Stock exchanges (such as NYSE, NASDAQ)

• Brokers and Securities Dealers

• Investment Advisors and Hedge Funds

• Public securities issuance projects (such as IPOs, ETFs, bonds, etc.)

International influence

The SEC is widely regarded as a global benchmark for securities regulation, and its standards have a profound impact on global financial markets. Many countries have referenced the SEC's institutional design when establishing their own securities regulatory agencies.

Conclusion

The SEC is a core institution that maintains the integrity and stability of the U.S. capital market. It plays a crucial role in investor protection, market oversight, and prudent support for financial innovation. For investors, understanding the SEC's system and functions can help them better understand the operating logic and regulatory environment of the U.S. stock market.