What Is the Securities and Exchange Commission (SEC)?

What Is the SEC? Defined, How it Works, Example

By Adam Levy – Updated Aug 22, 2024 at 9:55 AM

Key Points

The SEC ensures market transparency by mandating audited reports and regulating insider trades.
EDGAR is utilized by the SEC for investor access to company reports ensuring investment decisions.
The SEC enforces laws to protect investors and markets, executing civil suits against violators.

The SEC, or Securities and Exchange Commission, is an independent government agency responsible for ensuring the integrity of the capital markets in the United States. Created in the aftermath of the Great Depression, the SEC aims to increase transparency and fairness in financial markets by requiring audited financial reporting and restricting insider trading, among many other duties.

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An image of the U.S. Capitol building with a background of currency. — Image source: Getty Images

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The SEC requires publicly traded companies to submit quarterly and annual reports, and it provides access to its reports for investors through an online database called EDGAR (the Electronic Data Gathering, Analysis, and Retrieval system).

The agency is also responsible for enforcing several laws designed to protect investors and capital markets. That includes the Securities Act of 1933, the Investment Advisers Act of 1940, the Investment Company Act of 1940, Sarbanes-Oxley (2002), and Dodd-Frank (2010). It primarily enforces those laws by bringing civil suits against violators.

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About the Author

Adam Levy is a contributing Motley Fool stock market analyst covering technology, consumer, and financial stocks and how policy, economic, and consumer trends shape personal finance, Social Security and retirement savings. Before The Motley Fool, Adam was a financial advisor at Edward Jones. He studied finance and electrical engineering at Carnegie Mellon University.

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