{"id":22861,"date":"2024-04-23T11:20:37","date_gmt":"2024-04-23T15:20:37","guid":{"rendered":"https:\/\/www.sage.com\/en-us\/blog\/?p=22861"},"modified":"2026-02-12T04:07:54","modified_gmt":"2026-02-12T09:07:54","slug":"what-is-the-security-exchange-commission","status":"publish","type":"post","link":"https:\/\/www.sage.com\/en-us\/blog\/what-is-the-security-exchange-commission\/","title":{"rendered":"What is the Securities & Exchange Commission (SEC)?"},"content":{"rendered":"
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\n\t\t\t\t\t\tWhat is the Securities & Exchange Commission (SEC)?\t\t\t\t\t<\/h1>\n\t\t\t\t<\/div>\n\n\t\t\t\t\t\t\t\t\t

\n\t\t\t\t\t\t\t\t\t\t\t<\/p>\n\t\t\t\t\n\t\t\t\t\n\t\t\t\t\n\t\t\t<\/div>\n\n\t\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t<\/div>\n\t

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\n\t\t\t\n\t\t\t\t\"\"\t\t\t\tDouglas Bonderud<\/span>\n\t\t\t<\/a>\n\n\t\t\t\t\t<\/div>\n\n\t\t\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t<\/div>\n<\/div>\n\n\n\n

What is the purpose of the Securities & Exchange Commission?<\/strong><\/p>\n\n\n\n

The Securities and Exchange Commission (SEC) was created to ensure fair market activity, enforce financial regulations, and encourage capital formation. <\/p>\n\n\n\n

For example, the SEC played a key role in helping the economy recover after the Great Recession of 2008 prosecuting the financial institutions responsible and returning billions of dollars to the market.<\/p>\n\n\n\n

While this benefits investors and big organizations, small business owners are often left wondering what role the SEC plays in their day-to-day operations, and how the SEC can help them succeed.<\/p>\n\n\n\n

In this piece, we’ll explore the history of the SEC, the role it plays in U.S. markets, and what this means for your small business.<\/p>\n\n\n\n

Here’s what we’ll cover in this article<\/h3>\n\n\n\n

What are securities? What is an exchange?<\/a><\/strong><\/p>\n\n\n\n

What is the SEC?<\/a><\/strong><\/p>\n\n\n\n

What role does the SEC play in US markets?<\/a><\/strong><\/p>\n\n\n\n

How does the SEC help small businesses?<\/a><\/strong><\/p>\n\n\n\n

Final thoughts on the Securities and Exchange Commission<\/a><\/strong><\/p>\n\n\n\n

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What are securities? What is an exchange?<\/h2>\n\n\n\n

Before diving into the details of the SEC, it’s worth breaking down the basics: What exactly is a security, and what is an exchange?<\/p>\n\n\n\n

Securities are broadly defined<\/strong><\/a> as financial instruments that are negotiable and hold some type of value. Common examples of securities include stocks, bonds, and options. <\/p>\n\n\n\n

It’s also important to note that securities are fungible. This means they can be interchanged with assets of the same value and type. Consider currency. <\/p>\n\n\n\n

While not a security, cash is fungible \u2014 one U.S. dollar bill can be exchanged with any other and retain the same value.<\/p>\n\n\n\n

An exchange, meanwhile, is any marketplace where securities can be traded. <\/p>\n\n\n\n

Historically, these marketplaces were physical \u2014 stock exchanges are a good example \u2014 but many of these marketplaces are now digital. <\/p>\n\n\n\n

The SEC oversees securities and exchanges no matter where they’re located and no matter what form they take.<\/p>\n\n\n\n

What is the SEC?<\/h2>\n\n\n\n

The SEC is a regulatory and administrative agency created by the U.S. government in 1934 under the Securities Exchange Act. <\/p>\n\n\n\n

This Act was passed in response to the stock market crash of 1929, which sent the American market into a tailspin and led to significantly reduced investor confidence. <\/p>\n\n\n\n

The SEC was given a three<\/strong><\/a>-part mission<\/strong><\/a> to help stabilize markets and encourage investor confidence:<\/p>\n\n\n\n

1. Ensure fair market activity<\/h3>\n\n\n\n

According to the SEC, the U.S. capital markets “are the deepest, most dynamic, and most liquid in the world. <\/p>\n\n\n\n

They also have evolved to become increasingly fast and extraordinarily complex.” <\/p>\n\n\n\n

As of 2023, the SEC is responsible for the oversight of more than $100 trillion in securities trading across both digital and physical markets.<\/p>\n\n\n\n

The primary goals of this oversight are fairness and transparency. <\/p>\n\n\n\n

The SEC is responsible for ensuring that both buyers and sellers of securities are forthright and truthful about the value of securities, along with potential risks associated with these securities.<\/p>\n\n\n\n

2. Enforce financial regulations<\/h3>\n\n\n\n

Part of ensuring fair market activity means enforcing financial rules and regulations. <\/p>\n\n\n\n

As evidenced by the full text of the General Rules and Regulations of the Security Exchange Act<\/a>,<\/strong> much of this enforcement comes down to reporting and review. <\/p>\n\n\n\n

Case in point, under section 240.14c-3, security holders must provide the SEC with an annual report. Under section 240.15d-21, meanwhile, companies must provide reports for employee stock purchases, savings, and other similar plans. <\/p>\n\n\n\n

The agency then reviews these reports to ensure both buyers and sellers are acting in good faith.<\/p>\n\n\n\n

The SEC also recognizes that financial regulations aren’t static. As technology advances, the agency constantly evaluates current procedures and, where appropriate, modernizes rules to accommodate these changes.<\/p>\n\n\n\n

Over the last 90 years, Congress has passed additional Acts that help the SEC maintain market stability. These include:<\/p>\n\n\n\n