The mission of the SEC is to protect investors; maintain fair, orderly, and efficient markets; and facilitate capital formation. The SEC strives to promote a market environment that is worthy of the public’s trust. The Sec enforces the securities laws to protect the more than 65 million American households that have turned to the securities markets to invest in their futures whether it’s starting a family sending kids to college, saving for retirement or attaining other financial goals.
The mission of the U.S. Securities and Exchange Commission is to protect investors, maintain fair, orderly, and efficient markets, and facilitate capital formation. As more and more first-time investors turn to the markets to help secure their futures, pay for homes, and send children to college, our investor protection mission is more compelling than ever. As our nation’s securities exchanges mature into global for-profit competitors, there is even greater need for sound market regulation. And the common interest of all Americans in a growing economy that produces jobs, improves our standard of living, and protects the value of our savings means that all of the SEC’s actions must be taken with an eye toward promoting the capital formation that is necessary to sustain economic growth.
The world of investing is fascinating and complex, and it can be very fruitful. But unlike the banking world, where deposits are guaranteed by the federal government, stocks, bonds and other securities can lose value. There are no guarantees. That’s why investing is not a spectator sport. By far the best way for investors to protect the money they put into the securities markets is to do research and ask questions.
The laws and rules that govern the securities industry in the United States derive from a simple and straightforward concept: all investors, whether large institutions or private individuals, should have access to certain basic facts about an investment prior to buying it, and so long as they hold it. To achieve this, 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. Only through the steady flow of timely, comprehensive, and accurate information can people make sound investment decisions.
The result of this information flow is a far more active, efficient, and transparent capital market that facilitates the capital formation so important to our nation’s economy. To insure that this objective is always being met, the SEC continually works with all major market participants, including especially the investors in our securities markets, to listen to their concerns and to learn from their experience.
The SEC oversees the key participants in the securities world, including securities exchanges, securities brokers and dealers, investment advisors, and mutual funds. Here the SEC is concerned primarily with promoting the disclosure of important market-related information, maintaining fair dealing, and protecting against fraud. Crucial to the SEC’s effectiveness in each of these areas is its enforcement authority. Each year the SEC brings hundreds of civil enforcement actions against individuals and companies for violation of the securities laws. Typical infractions include insider trading, accounting fraud, and providing false or misleading information about securities and the companies that issue them.
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.
Though it is the primary overseer and regulator of the U.S. securities markets, the SEC works closely with many other institutions, including Congress, other federal departments and agencies, the self-regulatory organizations (e.g. the stock exchanges), state securities regulators, and various private sector organizations. In addition, the Chairman of the SEC represents the agency as a member of the Financial Stability Oversight Council (FSOC).
Strategic Plan: SEC’s new strategic plan puts investors, innovation, and performance at the top. The plan’s goals reflect the agency’s commitment to its longstanding mission while leveraging the opportunities and addressing the challenges that come from fast-evolving markets, products and services. the SEC has undertaken significant efforts to respond to the lessons learned from the global financial crisis. These efforts, combined with those of our regulatory colleagues, have made our capital markets stronger and more resilient. This is an important achievement, but we should not be satisfied. Our securities markets and the technologies that support those markets and our internal operations are also evolving and innovating at a fast pace. These changes present numerous benefits, as well as challenges. Future success requires the SEC to be efficient and nimble in the allocation of our resources. Investors have long looked to the securities markets to grow their hard-earned savings to fund important life events, including buying a new home, paying for college, and funding retirement. These needs are ever-changing. Today, significant numbers of Americans are nearing retirement age and living longer in retirement. This has put increased importance on the investment products that retirees rely on for stable income. The continuing evolution away from company-managed retirement plans to 401(k) plans also means that today’s workers must shoulder more responsibility for saving and investing for retirement compared to prior generations. Other areas also have experienced substantial evolution. When Main Street investors seek professional advice, their choices all too often are not as clear as they should be. The distinction between investment professionals who sell securities and those who provide investment advice has become less clear. This lack of clarity makes it challenging for investors to understand what standards of conduct govern the investment professionals who assist them. Contemporaneously, the number of companies raising capital through the public securities markets has declined, and those that are joining our public disclosure and offering regime are doing so later in their lifecycle. This dynamic has reduced the number of opportunities our Main Street investors have to invest in companies, including those in the emerging and growth sectors of our economy. Market developments such as these make the SEC’s vigilance more important than ever. They also require us to reassess the tools, methods, and approaches used in the past and adapt them to ensure their continued effectiveness. Most importantly, as our markets change, we should deploy our resources in the way that most benefits the long-term interests of our Main Street investors.