Question

Murdock, a student in an accounting course, argues that the primary mission of the Securities and Exchange Commission is to ensure that companies are profitable and securities are offered to investors who are able to afford them. Is this statement consistent with the mission of the Securities and Exchange Commission. Explain why or why not.

Answer 1

No, because of the following pointers:

a.The mission of the U.S. Securities and Exchange Commission is to protect investors, maintain fair, orderly, and efficient markets, and facilitate capital formation. It was created during the peak of the Great Depression as Congress passed the Securites Act of 1933 and the Securities Exchange Act of 1934, which created the SEC. It was designed to restore investor confidence in our capital markets by providing investors and the markets with more reliable information and clear rules of honest dealing.
b.responsibilties:interpret and enforce federal securities laws, issue/ammend rules, oversee inspection of firms/brokers/advisors/agencies , oversee private regulatory organisations.
c.it has 5 divisions
i.The Division of Corporation Finance assists the Commission in executing its responsibility to oversee corporate disclosure
ii.The Division of Trading and Markets which assists the Commission in executing its responsibility for maintaining fair/orderly and efficient markets.
iii.The Division of Investment Management assists the Commission in executing its responsibility for investor protection and for promoting capital formation through oversight and regulation of investment advisory companies.
iv.The Division of Enforcement assists the Commission in executing its law enforcement function by various investigations
v.The Division of Economic and Risk Analysis assists to maintain fair and orderly working of market
d.to conclude SEC was formed for all investors , to trade transparently so that a small investor and big investor are at a level playing field when investing