Securities and Exchange Commission (SEC)Financial Dictionary -> Investing -> Securities and Exchange Commission (SEC)
The Securities and Exchange Commission consists of five commissioners. The US Senate plays a role in their appointment, but the U.S. President makes the final decision. Their mandates last for a period of five years, ending exactly on 5 June of every year. No more than three of them can represent the same political party. The President does not have the authority to dismiss any of the commissioners, a condition ensuring the independence of the organ. This provision has proven rather controversial in recent years.
The SEC enforces a number of federal statutes, these being the Credit Rating Agency Reform Act of 2006, the Sarbanes - Oxley Act of 2002, the Investment Company Act of 1940, the Trust Indenture Act of 1939, and the Securities Act of 1933.
The SEC has four divisions and just under 4000 staff members. The body has eleven offices in the US, together with headquarters in Washington, D.C. The four main divisions are Enforcement, Investment Management, Trading and Markets, and Corporation Finance.
Enforcement cooperates with the other divisions in order to investigate violations of laws on securities and bring actions against perpetrators.
The Investment Management Division administers securities statutes and regulates investment companies, such as advisors and mutual funds. The responsibilities of this division are to respond to requests for exemptions, assist the SEC in interpreting regulations and laws for clients and SEC staff, respond to no-action requests, and review investment adviser filings, among others.
The Trading and Markets division holds authority over all broker and dealer companies, investment firms and self-regulatory organizations. They also interpret planned changes to rules and regulations.
Finally, Corporation Finance operates the online information database and registers corporate transactions like mergers. The division is tasked with providing interpretive assistance with regard to the rules and forms of SEC, reviewing documents that publicly held entities file with the Commission. These include: forms 10-Q and 10-K, annual reports to the shareholders, documentation on tender offers, proxy materials that are sent to shareholders prior to annual meetings, and filings regarding mergers and acquisitions, among others. These documents contain information on the business practices and financial conditions of companies.