What is the SEC?
The Securities and Exchange Commission (SEC) is a U.S. government agency created in 1934 after the stock market crash of 1929 and the Great Depression. Its mission is to protect investors, maintain fair and efficient markets, and facilitate capital formation.
The SEC enforces federal securities laws, regulates the securities industry (including stock and options exchanges), and oversees organizations like FINRA, accounting oversight boards, and credit rating agencies.
💡 Key Fact
The SEC has five commissioners appointed by the President. No more than three can belong to the same political party, ensuring bipartisan oversight of the markets.
How the SEC Protects You
1. Requiring Disclosure
Public companies must file regular reports (10-K, 10-Q) disclosing their financial condition, operations, and risks. This gives investors the information they need to make informed decisions.
2. Preventing Fraud
The SEC investigates and prosecutes securities fraud, insider trading, and market manipulation. In 2023, the SEC filed over 700 enforcement actions, obtaining billions in penalties and disgorgement.
3. Regulating Investment Advisors
Investment advisors managing over $100 million must register with the SEC. They must act as fiduciaries, putting your interests ahead of their own.
4. Overseeing Exchanges
The SEC supervises stock exchanges (NYSE, NASDAQ) to ensure fair trading practices and market integrity.
What the SEC Regulates
- Securities Exchanges — NYSE, NASDAQ, and other exchanges
- Broker-Dealers — Firms that buy/sell securities for customers
- Investment Advisors — Professionals who advise on investments
- Mutual Funds & ETFs — Pooled investment vehicles
- Public Companies — Corporations that sell securities to the public
- Credit Rating Agencies — S&P, Moody's, Fitch
⚠️ What the SEC Doesn't Regulate
The SEC does not regulate banks (that's the FDIC, OCC, and Federal Reserve), insurance companies (state regulators), or futures/commodities (that's the CFTC).
How to Verify Investment Professionals
Before working with any investment advisor or broker, verify their credentials:
For Investment Advisors:
Use the SEC's Investment Adviser Public Disclosure (IAPD) database:
🔍 Check an Investment Advisor
Search the SEC's database for registered investment advisors
Open SEC IAPD →For Brokers:
Use FINRA's BrokerCheck (the SEC delegates broker oversight to FINRA):
Filing Complaints with the SEC
If you believe you've been a victim of securities fraud or have witnessed violations, you can file a complaint with the SEC:
- Online: SEC Tips, Complaints and Referrals
- Whistleblower Program: If your tip leads to enforcement over $1 million, you may receive 10-30% of the sanctions collected
💰 Whistleblower Rewards
Since 2011, the SEC has awarded over $1.5 billion to whistleblowers. The largest single award was $279 million!
SEC and Investment Apps
Popular investment apps must be registered with the SEC or operate through registered broker-dealers:
- Robinhood — Registered broker-dealer (FINRA member, SEC-regulated)
- Fidelity — Registered broker-dealer and investment advisor
- SoFi Invest — Operates through SoFi Securities (registered broker-dealer)
- Acorns — Registered investment advisor
Always verify registration before investing through any app. Check our Top 10 rankings for vetted, SEC-compliant investment options.