How does the SEC protect the average investor?
Answers:
http://www.sec.gov/about/whatwedo.shtml...
This website will answer your question, I hope it help
Primarily through requiring that companies disclose adjectives stuff facts and risks. After that, it serves within a supervisory size to protect investors from fraud, after the NASD and the exchanges hold taken direct goings-on. They also police investment advisor filings and complaints against them beneath Federal statutes.
A little history of the SEC may serve as capably.
The SEC (or Securities & Exchange Commission) be created as a result of the crash of 1929. Prior to the crash in that be little federal regulation that govern the securities market.
During the hasty segment of the 1900's here be no stipulation for companies to disclose financial information and after World War I the US experienced a time of year of prosperity. Citizens reveled contained by the strange world and be effortlessly temped by promises of great returns and the stock flea market rose to bright height creating fortunes.
Around 20 million full-size and small investors lost an estimated $25 billion in stock during the stock flea market crash of October 1929. The bank be also sore after the crash since they have also invested heavily in the flea market. This cause second hysterics as population begin to apprehension the bank may not be capable of cover their deposits and begin withdrawing their change within mass. Subsequently some bank begin to fall through which really begin to exacerbate the situation.
As next to any virtuous crash near is a reliable depression afterwards and beside this depression the public confidence within the flea market be at an adjectives time low (as economically as the bank losing profoundly of money) congress fixed something needed to be done.
In 1933, Congress passed the Securities Act. The law in the exploit be intended to restore investor confidence in the securities flea market, create disclosure requirements for companies as very well as creating a more structured framework for buying and selling of securities.
Congress consequently established the Securities and Exchange Commission surrounded by 1934 to enforce the law inside the Securities Act of 1933. The Securities and Exchange Commission is also required to promote stability surrounded by the market and most importantly to protect investors. President Franklin Delano Roosevelt appointed Joseph P. Kennedy, President John F. Kennedy's father, to serve as the first Chairman of the SEC.
The Securities and Exchange Commission have 5 Commissioners who are appointed by the president (with the advice/consent of the Senate) and respectively Commissioner have a permanent status which last 5 years. Also no more than three Commissioners may be of like peas in a pod political affiliation. The chairman is also appointed by the president. The Commissioners own the knack to interpret, amend, create and enforce rules and law. Most meeting are spread out to the public except positive enforcement hearing and such type confidential events.
The Securities and Exchange Commission is also divided into 4 primary divisions. The Division of Market Regulation, Division of Corporation Finance, Division of Investment Management and the Division of Enforcement.
http://www.chartfilter.com/glossary/s78.
Also see Securities Act of 1933 - http://www.chartfilter.com/glossary/s79.
and Securities Exchange Act of 1934
http://www.chartfilter.com/glossary/s80.