What is the SEC?

Reading this article’s title, you may have been thinking about the popular college football conference. However, in finance and business world, the SEC is a powerful government regulator.

Photo by Alesia Kozik on Pexels.com

The SEC, formally known as the Securities and Exchange Commission, is a government agency tasked with protecting investors and promoting fairness in stock markets. It is headquartered in Washington, DC is governed by five commissioners.

The SEC is a powerful agency as every public company must adhere to its guidelines. As a refresher, public companies are those that trade on a stock exchange whose shares can be purchased by anyone. Companies are required to make periodic financial disclosures to the SEC on a quarterly and annual basis. By making these disclosures, investors can examine the finances and operations of the companies they are invested in.

In addition, the SEC creates rules and regulations for the public markets and investigates companies that may be in violation. For example, the SEC played a major role in the collapse of Enron, by investigating and exposing financial irregularities at the company. Also, in 2018, the SEC fined Tesla founder and CEO Elon Musk $40 million for making improper financial disclosures via social media.

Overall, the SEC is an important government agency that protects investors and ensure fairness in the public markets. By requiring periodic disclosures and providing oversight to companies, the SEC increases investor confidence and enforces the law.