Securities and Exchange Commission

Securities and Exchange Commission. Established by the Securities Exchange Act of 1934, the Securities and Exchange Commission (SEC) was given broad authority to regulate stock exchanges, brokers, and dealers. The previous year, President Franklin Delano Roosevelt had urged Congress to mandate “full and fair disclosure” of all new security issues, and to require sellers to provide accurate information. Meanwhile, the Senate Banking and Currency Committee, directed by chief counsel Ferdinand Pecora, uncovered evidence of fraud, corruption, and gross misrepresentation in the buying and selling of securities.

In response, Congress passed the Securities Act of 1933, requiring all companies issuing stock to file with the Federal Trade Commission detailed information regarding their business and financial condition. Barraged with business complaints that the 1933 law was too intrusive, Congress in the 1934 measure limited the law's scope and transferred its administration to the newly created SEC. The SEC later gained additional regulatory authority through the Public Utilities Holding Company Act (1935), the Investment Companies Act (1940), the Investment Advisers Act (1940), and other measures. In 1977, the SEC mandated an end to fixed broker commissions and, in 1988, gained new authority over stock‐index futures. Possessed of quasijudicial powers, the SEC's decisions can be appealed in federal court.

For many observers, the SEC epitomizes the reform spirit of the New Deal Era and has set a standard of excellence for federal regulatory commissions. Some critics, however, insist that the agency's reliance on self‐regulation has served the interests of the securities industry better than those of investors and the general public.
See also Banking and Finance; Business; Business Cycle; Depressions, Economic; Economic Regulation; New York Stock Exchange; Stock Market; Stock Market Crash of 1929.

Bibliography

Michael E. Parrish , Securities Regulation and the New Deal, 1970.
Joel Seligman , The Transformation of Wall Street: A History of the Securities and Exchange Commission and Modern Corporate Finance, 1982.

John D. Buenker