In last week’s post we discussed the Financial Conduct Authority and its oversight of the United Kingdom’s financial services industry. This week we turn to the United States and most powerful regulator.
Please visit our website if you want to learn more about Untied Atlantic Legal Services and how we can help investment advisers get registered through our Adviser Launch Process or how you can leverage our Adviser Assessment System to assess legal and compliance risk during the investment adviser acquisition process.
The Securities and Exchange Commission
The Securities and Exchange Commission (SEC) is a U.S. government agency responsible for regulating and overseeing the securities industry. Created in 1934 as a result of the Securities Exchange Act of 1934, the SEC is tasked with protecting investors, maintaining fair and efficient markets, and facilitating capital formation. We encourage you to learn more about the SEC by visiting their website.
Role and Oversight
The SEC’s primary role is to protect investors and ensure that they are provided with complete and accurate information about investment opportunities. It achieves this by requiring companies to register their securities offerings with the SEC before they can be sold to the public. The SEC also requires companies to regularly disclose important financial information to investors so that they can make informed decisions.
In addition to its regulatory role, the SEC is also responsible for enforcing federal securities laws. It has the power to investigate potential violations of securities laws and can bring civil charges against individuals or companies that it believes have broken these laws. The SEC can also work with other law enforcement agencies to pursue criminal charges when appropriate.
The SEC oversees a wide range of market participants, including public companies, investment advisers, and broker-dealers. It also regulates securities exchanges, such as the New York Stock Exchange and NASDAQ, and works to ensure that these markets operate in a fair and efficient manner.
Powers
The SEC has broad powers to regulate and oversee the securities industry. Some of its key powers include:
- Enforcement: The SEC has the power to bring civil charges against individuals and companies that violate securities laws. It can also work with other law enforcement agencies to pursue criminal charges.
- Rulemaking: The SEC can issue rules and regulations that govern the securities industry. These rules can cover a wide range of topics, from disclosure requirements for public companies to restrictions on insider trading.
- Registration: The SEC requires companies to register their securities offerings before they can be sold to the public. This allows the SEC to review the offering documents and ensure that investors are provided with complete and accurate information.
- Oversight: The SEC has the power to oversee securities exchanges, investment advisers, and broker-dealers. It can also conduct investigations into potential violations of securities laws and require these market participants to provide information and documents as part of these investigations.
Conclusion
The Securities and Exchange Commission plays a critical role in protecting investors and maintaining fair and efficient markets. Its powers to enforce securities laws, issue rules and regulations, and oversee market participants help to ensure that investors are provided with complete and accurate information and that markets operate in a fair and transparent manner. As the securities industry continues to evolve, the SEC will remain an important regulator and watchdog, working to protect the interests of investors and the integrity of the markets.
About the Author
Michael Rasmussen is the founder of United Atlantic Legal Services. He is a licensed attorney in Florida and registered solicitor in the United Kingdom. Michael has acted as General Counsel and Chief Compliance Officer to several investment advisers, including private fund managers, responsible for the management of billions of dollars in client assets.
Michael is also the founder of FinProLaw, an online learning platform where Michael has created courses designed for investment adviser compliance professionals. These courses include:
- Investment Adviser Compliance Essential for Chief Compliance Officers
- Foundations of Investment Adviser Compliance
- What is a “Security”?
- Investment Adviser Marketing Rule
- Regulation A – Exemption from Registration
- Regulation Crowdfunding – Exemption from Registration
- Regulation D – Exemption from Registration
Investment adviser firms who are also clients of United Atlantic Legal Services can receive many of these courses at a significantly reduced fee or, in some cases, at no expense. Contact us today or visit the FinProLaw to learn more.
Please visit Michael’s website to learn more about Michael and his insights into the investment adviser industry. He can also be found on LinkedIn.