The U.S. Securities and Exchange Commission was established by the U.S. Congress in 1934 to regulate trade in shares, bonds and other securities. After the stock market crash of October 29, 1929, reflections on its causes prompted the Securities and Exchange Commission to undertake appropriate reforms. Controls of the issue and trading of securities have so far been practically non-existent, allowing for any number of securities market fraud and manipulation.

In order to get the stock exchange out of chaos and regain the lost trust of investors and stock market participants - the United States Congress passed laws creating the Securities and Exchange Commission (SEC) and defining its duties. The Securities Act of 1933 required public companies to register the sale and distribution of shares and to regularly disclose financial information in reports.

The Securities Trading Act of 1934 contributed to the creation of the SEC to regulate stock exchanges, brokers, brokerage houses and over-the-counter markets, and to monitor the required reports and financial information. An important law was also the 1935 Wheeler-Rayburn law, which clearly defined the roles of holding companies and introduced the principle of their control. This movement ended the practice of using holding companies to obscure intermingling company properties. Moreover, the act authorized the Securities and Exchange Commission (SEC) to interfere in the case of creating unnecessarily complicated holding entities - able to interfere and break them down into smaller entities when there is a suspicion of unclear organizational and financial structure of companies.

Since then, brokers, dealers and stock exchanges are now legally obliged to put the interests of investors first and treat them in a fair and equitable manner. Congress established the SEC to enforce these rules for the benefit of investors and future market stability.

Subsequent structural and legal changes and reforms to the SEC now allow for full oversight of all market and stock market players and participants to ensure full security and improve the efficiency of the US securities and stock market.

SEC and its duties