Skip to main content

How SEC regulates stock market?



Securities and Exchange Commission (SEC) is independent U.S federal agency that regulates the stock market. It was created in 1934 by Congress to help restore investor confidence after the 1929 stock market crash. The Securities Exchange Act of 1934 was created by Securities and Exchange Commission. It govern securities transaction on the secondary market relying on Securities Act of 1933 which increased transparency in financial  statements and  established  laws against fraudulent activities. In essence SEC provides transparency by ensuring accurate and consistent information about companies that allows investors to make informed and sound decisions. Without transparency stock market would be vulnerable to market speculation and creation of asset bubbles. 

Securities and Exchange Commission has five commissioners and five different divisions:

Division of corporate finance - review corporate filing requirements ensuring that investors have complete and accurate information on company's financial health that will help them make the best decision.

Division of investment management - regulates investment companies, variable insurance products and federally registered investment advisers. It also oversees The Securities Investor Protection Corporation (SIPC) that insures investment accounts in case that brokerage firm goes bankrupt.

Division of Enforcement - enforces SEC regulations by investigating and prosecuting violations of securities laws and regulations.

Division of Trading and Market - establishes and maintains standards that regulate the stock market. It oversees securities firms and exchanges as well as industry's self regulatory organizations.

Division of Economic and Risk Analysis - economic data and risk analysis to other division in order to integrate them in the core mission of SEC. This division predicts how proposed rules would affect market.

United States stock market is one of the most regulated markets in the world with high level of transparency which attracts many business to the United States. SEC's monitoring of exchanges and all organizations connected with selling of securities has a big role in creating such highly regulated market. It is fairly easy to take your company public in the U.S which helps companies grow larger at a faster rate. By conducting research in financial literacy SEC found out that average investor doesn't poses enough knowledge about the way market and economy function. That is the reason why SEC is so protective of ordinary, non-accredited investors through its regulations. It makes safe for average investor to buy stocks, bonds or mutual funds by regulating sale of those securities and providing investors with information that will help them make investing decisions.
Labels:
Location: West Palm Beach, FL, USA

Comments

Post a Comment

Popular posts from this blog

OTC stocks more difficult to trade and deposit

  Mina Mar Group helps micro-cap companies structure their growth. Micro-capitalized companies are those with less than $50,000,000 in equity, sometimes under $1,000,000. Restructuring involves raising money (both debt and stock), and planning how they will eventually harvest that wealth. If you’re a founder or investor, the secret to harvesting your equity is to possess assets with a developed market for their sale; up until recently, that market was the public market. Now, Over-The-Counter Securities (“OTC Securities”) don’t serve that purpose since, unless you’re a tech unicorn doing an IPO, there are essentially no ways to sell the shares you’ve invested in. OTC securities – how they were deposited five years ago. Brokerages all around the country have tightened compliance over the past five years to the point where no one may deposit share certificates into their brokerage accounts, even if they can prove that they paid for them. Consider the following demand from a secondary brok
Post a Comment
Read more

S1 Registration

A Form S1 represents the opening registration that a US firm must submit with the SEC prior to an Initial Public Offering. The Securities Act requires a registration statement, otherwise known as Securities and Exchange Commission Form S1, previous to security can be issued on a public exchange such as the NASDAQ, NYSE, or other exchanges. Foreign corporations can register with the SEC, but they must do so using the SEC Form F1. Corporations must fill out Form S1 to outline their intended use of capital proceeds, a description of their current business strategy and competition, and a brief prospectus for the new security, including offering pricing mechanism and any other dilution to other listed stocks.  The SEC also mandates that any material business conducted between the corporations and its directors and external counsel be disclosed. Investors can access S1 filings online in order to do due diligence on new offers before they go public.  As a result, businesses can use the SEC’s
Post a Comment
Read more

Foreign Companies

Lately, we are getting many inquiries about dual listing or to list foreign companies either through IPO or RTO on OTCmarket. What are the benefits for foreign companies to be listed on OTC markets and how they can do that?  Is it an easy procedure, and what are the conditions? What is the main reason for companies that are listed on qualified foreign exchanges to trade on OTC markets? We are here to cater to your questions by providing you with the right answers. The first thing we need to start with is that this market is a global market. Only that fact gives you countless opportunities. To be listed on Wall Street which represents a vital center of global finance, for early-stage growth companies, and having access to US investors can bring a significant competitive advantage. It is appropriate for small businesses due to its regulatory structure, which gives better transparency and accessibility to a bigger pool of less risk-averse and more active investors. This is important for s
Post a Comment
Read more