Security and exchange commission refer to a government commission that was created by the congress, in order to protect investors, and regulate the markets securities. Additionally, the security and exchange commission has a duty to monitor the corporate takeovers in the United States. The commission is made up of five commissioners that are appointed by the president of the United States. The senate of the United States approves the five commissioners. The positions of the commissioners expire each year. Among the commissioners, three should be from different political parties. The agency has six districts, and five regional offices in the United States, with approximately 900 employees (Khademian 522). The Securities and Exchange Commission have statutes that enhance promotion of public disclosure, and protection of the investing public against the manipulative practices, and fraud in the market securities. The security and exchange commission have a role to register all the issues of securities that are offered in the interstate commission, through either the internet or mail. According to the Securities and Exchange Commission’s domains, any client who purchases a company’s equity of more than five percent has to report to the commission before ten days are over. This is because the purchase of more than five percent may cause takeover threats to a company. In the United States, the Securities and Exchange Commission serves as a federal agent that is responsible for the enforcement, and administration of the laws of the federal security. The commission protects the investors in the market by ensuring fair, and honest market securities. The commission uses different strategies to enforce laws in order to ensure a secure market. Some of these strategies include; prosecution, suspension of licenses, injunctions, and fines.
The security and exchange commission used its rule making authority fashion technical, and procedural rules, make rules that implement the law, and to define the terms that have been used in the laws. The commission has also devised forms in which various requirements in the rules and statutes are fulfilled. The commission has engaged in law making process through the releases the commission has produced, which contains opinions on the questions that concern the market place. The commission distributes its articles to companies, press, and firms that are registered with the security and exchange commission, and individuals who are interested. Moreover, the commission has shown its concern through responding to individual private inquiries. Through the act of 1933, the SEC ordered the registration of all the public offerings of security in the inter-state commerce (Khademian 525). SEC ensured that the provisions of registration applied to all the security issuers, and all the other people who acted on their behalf. The 1933 act by the SEC prohibited all the deceptive practices that are practiced, in the sale of securities, regardless of whether the securities require registration. The commission ensures the review of all the registration documents that are required in the 1933 act, to determine whether the registration is required. Through the registration with the SEC, the potential investors get a chance for an informed evaluation focusing on the worth of the market securities. However, through registration the investor is not secured from loss of his or her purchase.
The SEC, through it leadership, has addressed the key weaknesses of the agency. Because of this, positive progress has been noted in different areas of the United States’ market. In order to ensure change in the reform by the SEC, the recommendation of a clear plan was required (Holger et al 128). This plan could be inclusive of the ways of making a ruling, enforcing effectiveness, and supervisory inspections. There was a recommendation to improve the size of the commission, from five to seven members. The day-to-day implementation of the commission was to be led by deputy chairperson for management and operations. Through the efforts of security and exchange commission, the United States chamber of commerce’s center for capital markets competitiveness was established. The chamber ensured that the capital markets of the United States were among the most efficient, innovative, and fair, in the world (Australasian Business Intelligence 43). Through the exchange act of 1934, the Securities and Exchange Commission regulated the secondary trading activities between individuals, and companies in which there is no relationship between the original security issuers.
The success of the Securities and Exchange Commission is evident in the act of 1933. Through the act, the commission was able to compel disclosure of the facts about the securities that are offered, and sold through mails, or the interstate commerce. The act ensured that, before offering any issue of security for public sale, the issue has to be registered through the Securities and Exchange Commission. The registration document has to produce clear information on the securities, and the companies that issue the securities. The commission is important because it denies some registrations after examining them and finding that it might be misleading. In case a registration is denied, the security organization is not allowed to offer services for sale. Through the 1934 act, SEC increased information to investors in order to prevent unfair practices in the stock exchange of the United States (Virt-X 12). Through the public utility holding company act, the commission regulated the financial practices of the holding-company systems, which ensured the control of electric, and gas utilities. Through the act, the all the holding companies were registered, and the uneconomic holding structures were eliminated. This led to the supervision of their financial practices, and their transactions. SEC provided for the regulation, and the registration of the investment companies, investment advisers, and the regulation of investment trusts.
The laws that were administered by the Securities and Exchange Commission gave investors a degree of safety, through which they could entrust their money to different enterprises. These laws have ensured there has been a shift in the emphasis of determination for the quality of goods. The responsibility has shifted from the buyer, to the seller. The security and exchange commission have succeeded in the facilitation of capital formation, protection of investors, and in the maintenance of efficient, orderly, and fair markets. The SEC was successful because; it was formed after the crash of the stock market in 1929 (Richman 52). Through the works of the commissioners, the investors in the United States market regained confidence in their jobs. The congress held meetings, which aimed at identifying problems, and finding their solutions. The success of the commission was based on the trust, which gave confidence to the investors. The SEC ensured that all the people involved in selling trade securities had to treat the investors honestly, and fairly. Moreover, SEC ensured that the companies that offered security services for sale told the truth about their businesses, the risks involved, and securities in which they are involved.
The Securities and Exchange Commission was successful to ensure financial disclosure, and prevention of fraudulent sale of stock. The SEC was capable of restoring the public confidence after the crash of the stock market in 1929 (Holger 136). This is because, both the large and small investors, including the banks that had offered loans, lost a large amount of money. The SEC regained investor confidence in the capital markets through the provision of reliable information to investors, and rules that ensured honesty dealings among the traders. Among the responsibilities of Security and Exchange commission was; amendment of the existing rules, and issuing new ones, coordination of the united states securities regulation with the state, federal, and the foreign authorities, and the interpretation, and enforcement of the federal securities laws. SEC composed of the division of corporate finance, which assisted the commission in implementing the responsibility of overseeing the corporate disclosure, of crucial information to investors and the public (Richman 42). SEC, through its staff, provided companies with assistance that assisted in the interpretation of the rules of the commission. The staff guided in the adoption of new rules by the companies. SEC made the initiative of disclosing information about the business practices, and the financial condition of different companies. Through this, the investors were able to make informed decisions about the businesses they want to get involved. The organization carried a review process to ensure that the companies that are held publically meet their requirements in order to improve the quality of the disclosure. SEC was successful in administration of federal security laws that were written, to enhance protection of investors.
Works cited
Erchinger, Holger, and Winfried Melcher. "Convergence Between US GAAP And IFRS: Acceptance Of IFRS By The US Securities And Exchange Commission (SEC)." Accounting in Europe 4.2 (2007): 123-139. Print.
Khademian, Anne M.. "The Securities And Exchange Commission: A Small Regulatory Agency With A Gargantuan Challenge." Public Administration Review62.5 (2002): 515-526. Print.
"National prices A$2.5 billion SEC global RMBS.(Securities & Exchange Commission, residential mortgage-backed securities)(Brief Article)."Australasian Business Intelligence 27 Sept. 2004: 43. Print.
Richman, Laura. "Securities Exchange Commission Proposes Pay Ratio Disclosure Rules." Mondaq Business Briefing [newyork] 4 Oct. 2013: 23. Print.
"U.S. Securities and Exchange Commission | Homepage." U.S. Securities and Exchange Commission | Homepage. N.p., n.d. Web. 24 Nov. 2013. <http://www.sec.gov/>.
"Virt-X Launches, Keeps Tradepoint's SEC OK.(Securities Exchange Commission)(Brief Article)." Securities Industry News25 June 2001: 7. Print.
