What Is the SEC and What Does It Regulate?
July 9, 2026
The SEC's Mission
The Securities and Exchange Commission (SEC) was established by the Securities Exchange Act of 1934, in the wake of the 1929 stock market crash and the Great Depression that followed. Its mission is threefold: to protect investors, to maintain fair, orderly, and efficient markets, and to facilitate capital formation. These three goals sometimes create tension with each other, and much of securities regulation is an attempt to balance them.
What the SEC Regulates
The SEC's regulatory reach is broad. It oversees the disclosure requirements for public companies through the Securities Exchange Act and the Securities Act of 1933. It regulates investment advisers, broker-dealers, exchanges, and clearing agencies. It enforces insider trading laws and accounting fraud statutes. And it manages EDGAR — the public disclosure database that makes all of this information freely available.
What the SEC Does Not Do
Critically, the SEC does not evaluate whether a company is a good investment. When a company registers securities with the SEC, the agency reviews whether the disclosure is complete and materially accurate — not whether the business is sound or the valuation is reasonable. The SEC's approval of a registration statement is not an endorsement of the company or the securities being offered.
Enforcement
The SEC brings both civil and administrative enforcement actions against individuals and companies that violate securities laws. Enforcement priorities include accounting fraud, insider trading, market manipulation, and Ponzi schemes. Criminal cases are referred to the Department of Justice. While the SEC cannot impose criminal penalties directly, its investigations frequently lead to DOJ referrals and parallel criminal prosecutions.
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