Securities and Exchange Commission Explained by an Investor

The Securities and Exchange Commission (SEC) is a United States governmental agency who’s purpose, as stated by the SEC’s official website , is “to protect investors, maintain fair, orderly, and efficient markets, and facilitate capital formation.” The SEC was created in 1934 as the result of a series of devastating financial panics that occurred throughout the 1920s.


What Does the Securities and Exchange Commission Do?

One of the many ways that the SEC ensures markets are fair for investment is through their legislation which prohibits fraud in the securities industry. In fact, this is also one of their main functions: to enforce federal security laws . One way that they accomplish that goal is by prosecuting individuals or companies involved with fraudulent behavior.

In addition to preventing fraud, a large part of what the SEC does involves managing and organizing their database of information about companies whose products are publicly traded. This information is gathered from the filings these companies make to ensure that investors have access to it, free of charge.

To help protect consumers who invest in the stock market, the SEC also publishes a number of major studies. Their goal with these reports is to inform consumers about various issues related to trading stocks so they can better understand how to proceed should they choose to invest. In addition, the SEC created a consumer-focused app for mobile devices called “SEC Check First.” The purpose of this app is to provide investors with the information and tools they need in order to make informed decisions.

On top of all that, one of the most important functions of the SEC is providing access to tools which assist in analyzing investment data . The SEC’s online toolbox includes a number of free resources such as databases, risk management tools, calculators, and more.

For those who feel like they’ve been wronged by bad investments or even fraudulent behavior, there are also options available for filing complaints against securities professionals and companies. This typically involves contacting the person’s brokerage firm first if it was a broker-dealer issue and then moving on from there depending on how satisfied you were with their response . If needed, consumers can also file complaints with the SEC.

Related Reads: What You Should Know Before You Start Investing

The Four Functions of the Securities and Exchange Commission

The SEC has four main functions in their efforts to protect investors. These are:

– To enforce the federal securities laws

– To influence the formation of new rules and the enactment of existing ones

– To provide helpful resources for investors

– And to help make sure that companies are providing accurate financial information

As an investor, knowing about these primary goals of the Securities and Exchange Commission can be incredibly beneficial when it comes to making smart investment choices . Consumers have access to a number of free tools they can use to help them choose products which fit their needs as well as information databases containing research reports on various topics related to investing. When combined with all this knowledge, it becomes much easier for consumers to avoid bad investments.

What to Do If You Fall Victim to a Bad Investment

Unfortunately, it’s impossible for the Securities and Exchange Commission or any other organization to ensure that every investment a consumer makes is a good one. Some investments are inherently riskier than others, while some people simply lack the funds they need to invest in more profitable ventures. Sometimes things just don’t go as planned even when you’re making smart decisions, and that can leave investors stuck with bad deals .

In the unfortunate instance where you have been scammed by someone or lost money on an investment due to fraud, there are some steps you can take in order to recover your losses . This starts with filing a complaint with the company from which you purchased the stock from. It might be necessary to file a complaint with the Financial Industry Regulatory Authority (FINRA) or other organization if you are unable to resolve your issue directly with the brokerage firm.

Finally, should all else fail, consumers can file a petition for redress through the SEC’s online toolbox . This typically involves contacting one of their local offices and filing an online form which will then route your case to someone within that office who will investigate it further. The process involved in filing this type of complaint is meant to be as seamless as possible so investors shouldn’t face any major difficulties throughout it.

When Does the SEC Investigate Stockbrokers & Advisors?

While the SEC does not have jurisdiction over stockbrokers and investment advisors, they do investigate them if there are complaints of misconduct. This includes but is not limited to:

– Investment Fraud – If an individual or company is accused of trying to trick or deceive another person into investing in a fraudulent opportunity, the SEC will investigate.

– Employment Misconduct – The federal laws the SEC enforces cover both registered brokers as well as those who are unregistered . Should someone working with either type of broker violate these rules, that person can be prosecuted by the SEC.

– Unauthorized Practice – When brokers use titles that imply they are qualified to help other people invest their money, this falls under both misappropriation and unauthorized practice of law which is also a federal offense.

– Disclosure Violations – If a stockbroker or investment advisor fails to provide all of the information an investor needs in order to fully understand the risks involved with a certain investment, this is a violation of SEC rules and can result in charges being filed against them.

What Should an Advisor or Stockbroker Do if they Receive an SEC Subpoena?

If a stockbroker or advisor is notified that they must provide the SEC with any kind of information, it is important to keep in mind that there can be serious consequences if they fail to comply. This includes fines and even imprisonment . As such, it’s recommended that those who receive a subpoena contact an attorney as soon as possible so they can begin building their defense strategy right away.

Do I Need an Attorney after Receiving an SEC Subpoena?

Contacting an attorney who specializes in these types of cases would be ideal for anyone who has received a subpoena from the Securities and Exchange Commission. Not only will you have access to someone with extensive knowledge about this type of case , but also someone who can quickly and efficiently handle all the details involved with responding to a SEC subpoena.