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Securities and Exchange Commission

Franklin D Roosevelt

Securities and Exchange Commission: Franklin D Roosevelt was the 32nd American President who served in office from March 4, 1933 to April 12, 1945. One of the important events during his presidency was the establishment of the Securities and Exchange Commission. as part of FDR's New Deal Programs that encompassed his strategies of Relief, Recovery and Reform to combat the problems and effects of the Great Depression.

Definition and Summary of the Securities and Exchange Commission
Summary and definition:
The Securities Act of 1933 was passed by Congress on May 27, 1933, in the wake of the 1929 Stock Market Crash, requiring companies that sold bonds and stocks to provide full, complete and truthful information to investors.

The U.S. Securities and Exchange Commission (SEC) was created the following year on June 6, 1934. Congress established the Securities and Exchange Commission as an independent government agency to enforce federal securities laws to regulate the Stock Market and to prevent fraud.

Facts about Securities and Exchange Commission
The following fact sheet contains interesting facts and information on Securities and Exchange Commission.

The SEC was conceived after the Senate Committee on Banking and Currency investigated the New York Stock Exchange’s operations following the 1929 Wall Street Crash

The reform of securities trading, which was largely an unregulated industry, began with the Securities Act of 1933 and followed by the Securities Exchange Act of 1934 that created the SEC and the 1935 Public Utility Holding Company Act

The Securities Act of 1933 required Corporations selling bonds and stocks to register their sales and provide financial information about their company.

The Securities Exchange Act of 1934 regulated stock exchanges and brokers. It also provided for the monitoring of the required financial disclosures.

The 1934 law created the independent government agency called the Securities and Exchange Commission (SEC) to enforce federal laws to regulate the Stock Market and to prevent fraud.

The 1935 Public Utility Holding Company Act ended the practice of using holding companies to obscure the entwined ownership of public utility companies.

A highly coordinated effort was required to monitor the industry so Congress created the SEC. The role of the SEC was to enforce the new laws, promote stability in the markets and protect investors.

President Franklin D. Roosevelt appointed Joseph P. Kennedy, to serve as the first Chairman of the SEC.

The SEC is composed of five commissioners appointed by the U.S. President and approved by the Senate. The Commissioners each serve five-year staggered terms

The establishment of the SEC played an important part in to restoring investor confidence after the 1929 Wall Street Crash by:

  • Ensuring the end of stock manipulations and misleading sales practices by unscrupulous traders

  • Supervising the registration requirements of corporations and stockbrokers

  • Ensuring the full public disclosure of all relevant information regarding security transactions and preventing the unfair use of non-public information in stock trading

  • Prohibiting the buying of stocks and shares without adequate funds to pay for them

The SEC therefore plays a major role in preventing accounting fraud, insider trading and monitors information on investments to ensure it is not false or misleading

Needless to say the regulatory measures were greeted with bitter opposition by the financial community who believed that they would hinder the financing of industry.

US American History
1929-1945: Depression & WW2

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