June 6 is the U.S. Securities and Exchange Commission’s 80th birthday. It’s a good reason to revisit the agency’s role in regulating the world’s biggest securities market and the varying interpretations of its mission.
The Securities Exchange Act of 1934 created the SEC. That law regulates the trading of securities between persons often unrelated to the issuer, such as through brokers or dealers.
Prosecutors use the anti-fraud provisions of the ’34 Act and related rules to prosecute insider-trading and accounting fraud cases and compel registered brokers to communicate relevant information to their clients.
More recently, Congress has stepped in to mandate more disclosure — as with the Sarbanes–Oxley Act and Dodd-Frank — to further combat fraud in the marketplace.
Some SEC commissioners have said the disclosure rules have gone too far — moving into areas such as executive pay and the sourcing of conflict minerals by supply chains — sometimes leading to information overload.
Beyond the argument about how much disclosure is best, it’s obvious that the SEC’s ability to catch and punish those who commit fraud, aided by its whistleblower office, has enabled America’s securities market over time to function honestly and efficiently.
Corrupt markets don’t thrive. No one believes or feels safe in them.
Happy Birthday to the regulator of the world’s largest economy. Man, you have a tough job.
Julie DiMauro is the executive editor of the FCPA Blog and can be reached here.
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