Securities and Exchange Commission (SEC)

The U.S. Securities and Exchange Commission (SEC) is the regulating body for all U.S. stock exchanges. Its regulations protect investors, maintain fair, orderly, and efficient markets, and help people make money legally in a uniform and predictable manner.

Unlike the banking world, where deposits are guaranteed by the federal government, stocks, bonds and other securities can lose value. There are no promises to return an investor's money if the investment folds. Passive investors are ill-informed investors, who do not ask enough questions to know where and to what purpose they are putting their money. The SEC functions under the premise that reliable and publicly available information makes wiser investors who are more responsible for the outcome of their well-thought-out decisions.

The SEC requires public companies to disclose meaningful financial and other information to the public. This provides a common pool of knowledge for all investors to use to judge for themselves whether to buy, sell, or hold a particular security.

One of the major sources of information on which the SEC relies to bring enforcement action is investors themselves — another reason that educated and careful investors are so critical to the functioning of efficient markets. To help support investor education, the SEC offers the public a wealth of educational information on the SEC's website, which also includes the EDGAR database of disclosure documents that public companies are required to file with the Commission.

See Also

Categories:Accounting-Finance

Source

• SEC website
• SEC information for small businesses
• EDGAR - The SEC's database of filings and forms.