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Securities and Exchange Commission
Mission | History | Key Issues | Who's in Charge

Wednesday, December 18, 2002

Mission:

The SEC is the federal government's policing agency for the nation's financial markets. All companies that sell securities to the public must regularly submit important financial information, which it then makes available to investors through its Edgar Online database. The agency also oversees the major players in the securities world, including the stock exchanges, where the trades are made; the brokers and dealers who buy and sell the stocks; mutual funds; and investment advisers. The SEC pursues 400-500 civil enforcement actions a year for violations of securities law, such as insider trading, accounting fraud and giving false or misleading information about companies or their securities.

History:

Before the crash of 1929, the stock market was unregulated, and investors had no way of determining if the securities they were buying were worth their price. Of the $50 million in new securities offered in that decade, the SEC estimates that half became worthless. Millions of people lost their fortunes in the crash of October 1929, and banks that had invested in the stock market couldn't survive the "runs" by depositors who feared their cash would be lost. Congress created the SEC in 1934 to restore investor confidence in the markets, and President Franklin D. Roosevelt named Joseph P. Kennedy, President John F. Kennedy's father, as its first chairman.

Key Issues:

Arthur Levitt was seen as an activist chairman, passing two rules near the end of his term that were opposed by accounting firms and Wall Street. One restricted the consulting services that accounting firms can offer to audit clients; the other banned the age-old corporate practice of leaking market-moving information to stock analysts and big investors before making it public. Following Levitt, Harvey Pitt took the helm. Pitt has represented each of the Big Five accounting firms and their lobbying group. Viewed as conservative, he has advised corporations on how to avoid getting in trouble with the SEC. In November 2002, Pitt resigned under mounting pressure because of criticism over how he handled the creation of a national accounting oversight board. President Bush nominated William H. Donaldson, co-founder of a successful investment banking firm, former chairman of the New York Stock Exchange and former dean of Yale's School of Management, to be chairman of the Securities and Exchange Commission.

Who's in Charge

The SEC is run by five commissioners, each serving staggered five-year terms so that one commissioner's term ends on June 5 of each year. No more than three commissioners may belong to the same political party. The president designates one of the commissioners to be the chairman. Past chairman Arthur Levitt, who held the position from September 1993 to February 2001, was the longest-serving chairman in SEC history.

• Chairman William H. Donaldson took the helm on February 18, 2003.
Post profile: Donaldson

Important Links:

SEC

Edgar Online includes search tools for quarterly and annual reports (10-Qs and 10-Ks), prospectuses, mutual fund filings, ownership reports, executive compensation statistics, and other resources.

Some Post reporters find 10kwizard easier to search for companies' SEC filings, insider trading reports, etc.

You can also use washingtonpost.com's SEC document finder in the box above right.

To complain about a bad broker or firm, an unfair securities practices or the latest Internet fraud, use the SEC's complaint page or fill out a complaint form online.