The SEC is headed by five commissioners who are appointed by the president, one of whom is designated as chair. Each commissioner's term lasts five years, but they may serve for an additional 18 months until a replacement is found. To promote nonpartisanship, the law requires that no more than three of the five commissioners come from the same political party. The SEC consists of five divisions and 24 offices.
Their goals are to interpret and take enforcement actions on securities laws, issue new rules, provide oversight of securities institutions, and coordinate regulation among different levels of government. The five divisions and their respective roles are:. The SEC is allowed to bring only civil actions, either in federal court or before an administrative judge. Criminal cases fall under the jurisdiction of law enforcement agencies within the Department of Justice; however, the SEC often works closely with such agencies to provide evidence and assist with court proceedings.
In civil suits, the SEC seeks two main sanctions:. Among all the SEC's offices, the Office of the Whistleblower stands out as one of the most potent means of securities law enforcement.
When the U. Because many had previously provided false or misleading information, public faith in the integrity of the securities markets plunged. The SEC's primary tasks were to ensure that companies made truthful statements about their businesses and that brokers, dealers, and exchanges treated investors in an honest and fair manner. In the years since additional laws have aided the SEC in its mission:.
Today the SEC brings numerous civil enforcement actions against firms and individuals that violate securities laws every year. It is involved in every major case of financial misconduct, either directly or in conjunction with the Justice Department. Typical offenses prosecuted by the SEC include accounting fraud, the dissemination of misleading or false information, and insider trading.
After the Great Recession of , the SEC was instrumental in prosecuting the financial institutions that caused the crisis and returning billions of dollars to investors. Still, many observers have criticized the SEC for not doing enough to help prosecute the brokers and senior managers who were involved in the crisis, almost all of whom were never found guilty of significant wrongdoing. So far, only one Wall Street executive has been jailed for crimes related to the crisis. The rest either settled for a monetary penalty or accepted administrative punishments.
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I Accept Show Purposes. Your Money. Personal Finance. Your Practice. Popular Courses. Part Of. Types of Financial Crime and Fraud. Financial Crime and Fraud Examples. Control and Regulation. The SEC was established by the passage of the U. Securities Act of and the Securities and Exchange Act of , largely in response to the stock market crash of that led to the Great Depression. The SEC can itself bring civil actions against lawbreakers, and also works with the Justice Department on criminal cases.
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