Mason Robbins Essays (458 words) - Economy, Finance,

Mason Robbins Period 1 1/8/10 The SEC The U.S. Securities and Exchange Commission (SEC) is an independent agency of the United States federal government . The SEC holds primary responsibility for enforcing the federal securities laws, proposing securities rules, and regulating the securities industry, the nation's stock and options exchanges, and other activities and organizations, including the electronic securities markets in the United States In addition to the Securities Exchange Act of 1934 , which created it, the SEC enforces the Securities Act of 1933 , the Trust Indenture Act of 1939 , the Investment Company Act of 1940 , the Investment Advisers Act of 1940 , the Sarbanes-Oxley Act of 2002 , and other statutes. 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 Exchange Act or the 1934 Act). The SEC has a three-part mission: to protect investors; maintain fair, orderly, and efficient markets; and facilitate capital formation. To achieve its mandate, the SEC enforces the statutory requirement that public companies and other regulated companies submit quarterly and annual reports , as well as other periodic reports. In addition to annual financial reports , company executives must provide a narrative account, called the management discussion and analysis (MDA), that outlines the previous year of operations and explains how the company fared in that time period. MDA will usually also touch on the upcoming year, outlining future goals and approaches to new projects. In an attempt to level the playing field for all investors, the SEC maintains an online database called EDGAR (the Electronic Data Gathering, Analysis, and Retrieval system) online from which investors can access this and other information filed with the agency. Quarterly and semiannual reports from public companies are crucial for investors to make sound decisions when investing in the capital markets. Unlike banking , investment in the capital markets is not guaranteed by the federal government. The potential for big gains needs to be weighed against that of sizable losses. Mandatory disclosure of financial and other information about the issuer and the security itself gives private individuals as well as large institutions the same basic facts about the public companies they invest in, thereby increasing public scrutiny while reducing insider trading and fraud . The SEC makes reports available to the public through the EDGAR system. The SEC also offers publications on investment-related topics for public education. The same online system also takes tips and complaints from investors to help the SEC track down violators of the securities laws. The SEC adheres to a strict policy of never commenting on the existence or status of an ongoing investigation.