Explained: The U.S. Securities and Exchange Commission

The U.S. Securities and Exchange Commission (SEC) is the principal federal agency that regulates the U.S. securities markets. Created by Congress in 1934 in response to the Great Depression, its mission is to protect investors, maintain fair, orderly, and efficient markets, and facilitate capital formation.

The SEC has six divisions: Corporate Finance, Economic and Risk Analysis, Examinations, Investment Management, Trading and Markets, and Enforcement. The Enforcement Division oversees the SEC’s civil law enforcement function by conducting investigations into possible securities law violations and, where necessary, filing enforcement actions against wrongdoers.

The SEC has significant enforcement authority. It may initiate administrative proceedings or bring civil enforcement actions in federal court in cases involving alleged violations of the federal securities laws, including fraud, market manipulation, insider trading, and breaches of fiduciary duty by regulated entities. Available remedies include injunctions, civil penalties, disgorgement of unlawful gains, and bars from serving as officers or directors of public companies.

Given the global significance of U.S. capital markets, the SEC frequently addresses matters involving non-U.S. issuers, intermediaries, and investors. Its regulatory reach therefore has practical implications for international transactions, cross-border listings, and compliance programs of financial institutions operating in multiple jurisdictions.