The Security and Exchange Commission 1. When, Why, and by what authority the SEC was formed The SEC was founded in 1934 in the wake of the Great Depression – The SEC was created by section 4 of the Securities Exchange Act of 1934 (now codified as 15 U. S. C 78d and commonly referred to as the 1934 Act). The SEC was established by the United States Congress as an independent, quasi-judicial regulatory agency during the Great Depression that followed the Crash of 1929. The main reason for the creation of the SEC was to regulate the stock market and prevent corporate abuses relating to the offering and sales of securities and corporate reporting. The SEC was given the power to license and regulate stock exchanges, the companies whose securities traded on them, and the brokers and dealer who conducted the trading 2. The role of the Division of Corporation Finance Corporation Finance assists the commission in executing its responsibility to oversees corporate disclosure of important information to the investing public. Corporations are required to comply with regulations pertaining to disclosure that must be made when stack is initially sold and then on a continuing and periodic basis. The division’s staff routinely reviews the disclosure documents filed by companies. The staff also provides companies with assistance interpreting the Commission’s rules and recommends to the Commission new rules for adoption. This division is also responsible for operating EDGAR 3. The role of the Division of Trading and Markets The Trading and Markets division oversees self-regulatory organizations (SROs) such as FINRA and 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.
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