United States Securities and Exchange Commission


The United States Securities and Exchange Commission is an independent regulatory and law enforcement agency of the U.S. federal government charged with protecting investors, maintaining fair, orderly and efficient markets, and facilitating capital formation. Established in the wake of the 1929 Wall Street crash and the New Deal securities reforms, the SEC serves as the nation’s primary federal law enforcement and regulatory authority for the securities laws and investigates and pursues misconduct such as financial fraud, insider trading, and market manipulation. The SEC enforces the securities laws primarily through civil actions and, when appropriate, refers potential criminal violations to the Department of Justice. The agency is headquartered in Washington, D.C., and is often referred to simply as “the Commission” or “the Agency.”
Congress established the SEC through the Securities Exchange Act of 1934—specifically Section 4. Alongside the Exchange Act, the SEC administers and enforces a core set of statutes that shape U.S. capital markets, including the Securities Act of 1933, the Trust Indenture Act of 1939, the Investment Company Act of 1940, the Investment Advisers Act of 1940, and the Sarbanes–Oxley Act of 2002, among others. Through rulemaking, inspections, and enforcement, the SEC oversees public companies, broker-dealers, investment advisers, mutual funds, ETFs, and national securities exchanges.
The Commission is led by up to five Commissioners appointed by the President and confirmed by the Senate, with no more than three Commissioners from the same political party; the President designates one Commissioner as Chair. The agency’s work is carried out through six principal divisions—Corporation Finance, Economic and Risk Analysis, Enforcement, Examinations, Investment Management, and Trading and Markets—along with specialized offices supporting policy, compliance, and investor outreach.
The SEC enforces the securities laws primarily through civil actions brought in federal court or through administrative proceedings, and it may refer potential criminal violations to the Department of Justice for prosecution. In June 2024, the Supreme Court held that when the SEC seeks civil penalties for securities fraud, the Seventh Amendment entitles defendants to a jury trial, limiting the agency’s ability to impose such penalties through in-house adjudication.
The SEC has been the subject of debate and criticism over both enforcement choices and regulatory scope. After the collapse of Bernard L. Madoff Investment Securities, the SEC’s Office of Inspector General issued a report examining the agency’s failure to uncover Bernard Madoff’s Ponzi scheme despite receiving warnings and complaints over several years. In the 2020s, the SEC expanded its focus on cybersecurity and digital assets, including adopting rules requiring public companies to disclose material cybersecurity incidents and related governance information. The agency has also brought high-profile crypto-related cases, including a civil action against Samuel Bankman-Fried relating to investors in FTX Trading Ltd. and a case against Terraform Labs and Do Kwon that ended in a jury verdict and a settlement exceeding $4.5 billion following the collapse of the TerraUSD and Luna ecosystem. Enforcement and rulemaking in these areas have drawn both support and criticism, including disputes over the SEC’s theories of liability and the appropriate boundaries of disclosure obligations in rapidly evolving markets.
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Overview

The SEC has a three-part mission: to protect investors; maintain fair, orderly, and efficient markets; and facilitate capital formation.

Legal Authority and Statutory Framework

Congress established the SEC through the Securities Exchange Act of 1934—specifically Section 4. Alongside the Exchange Act, the SEC administers and enforces a core set of statutes that shape U.S. capital markets, including the Securities Act of 1933, the Trust Indenture Act of 1939, the Investment Company Act of 1940, the Investment Advisers Act of 1940, and the Sarbanes–Oxley Act of 2002, among others.

How the SEC Carries out its Mandate

The agency carries out that mandate in three main ways: through corporate disclosure, market supervision, and enforcement. Corporate disclosure protects investors by requiring public companies to publish standard financial information and plain-language discussion, so everyone can judge risk using the same basic facts. Market supervision helps keep markets fair and efficient by overseeing firms like broker-dealers and investment advisers and checking that they follow conduct rules and protect customer assets. Enforcement supports market integrity—and, in turn, capital formation—by investigating possible violations of the securities laws and bringing civil cases for misconduct such as fraud and market manipulation.

Disclosure Filings

Federal securities laws require public companies to disclose material information to ensure market transparency. This mandate nvolves filing periodic financial statements, accompanied by a Management’s Discussion and Analysis (MD&A), which offers a narrative explanation of the financial outcomes and associated operational risks. These reporting requirements aim to reduce information asymmetry by providing a uniform factual baseline for all market participants. To facilitate public access to these records, the agency maintains a centralized electronic database known as EDGAR (Electronic Data Gathering, Analysis, and Retrieval), which allows for independent analysis by both institutional and retail investors.
Quarterly and semiannual reports from public companies are crucial for investors to make sound decisions when investing in capital markets. Unlike banking, investment in capital markets is not guaranteed by the federal government. The potential for large gains needs to be weighed against that of sizable losses. Mandatory disclosure of financial and other information about the issuer and the security itself gives private individuals as well as large institutions the same fundamental facts about the public companies they invest in, thereby increasing public scrutiny while reducing insider trading and fraud.

Oversight of Market Participants

The SEC maintains a supervisory framework for the intermediaries that facilitate trading and asset management, including broker-dealers, investment advisers, and securities exchanges. The Division of Examinations executes this oversight by conducting risk-based inspections to verify compliance with federal laws regarding conflict of interest management and asset safeguarding. Examinations, however, are only one part of oversight. Ongoing supervision also requires routine monitoring of brokerage activity and firm conduct. For broker-dealers, the SEC relies on FINRA, a self-regulatory organization that operates under SEC oversight and performs much of the day-to-day monitoring and related compliance work for brokerage firms. The setup lets the SEC focus more attention on higher-risk firms and market-wide issues while maintaining broad coverage across the sector.

Investigations and Enforcement

The SEC investigates possible violations of the securities laws, including fraud, insider trading, market manipulation, and misleading disclosures. The Division of Enforcement leads these cases as a civil authority and can bring actions in federal court or in SEC administrative proceedings. The SEC often coordinates with the Department of Justice (DOJ), Federal Bureau of Investigations (FBI), and other law enforcement bodies, since the same misconduct can trigger both civil penalties and criminal charges. Outcomes can include financial penalties, orders to return ill-gotten gains, and bars that prevent individuals from working in the securities industry. A whistleblower program also facilitates the reporting of misconduct through public tips. During an investigation, the SEC generally does not comment publicly to protect the process and the rights of the parties involved.

History

Origins

The Era of Blue Sky Laws

Before the enactment of the federal securities laws and the establishment of the SEC, the regulation of securities trading in the United States relied primarily on state-level statutes known as blue sky laws. Kansas led the way in 1911, with banking commissioner Joseph Norman Dolley pushing for measures to guard investors against fraud by mandating registration of securities offerings, sales, and participants like stockbrokers and firms. The name "blue sky" stems from a 1917 Supreme Court decision in Hall v. Geiger-Jones, which likened dubious schemes to peddling "feet of 'blue sky'"—baseless ventures exploiting the unwary.
By 1933, these laws were on the books in 47 states, Nevada being the outlier, but details differed markedly from one to another. Certain versions took a merit-based approach, letting officials assess if investments promised reasonable returns; others stuck to blocking overt deception. Still, the system faltered overall, hampered by patchy standards, lax enforcement, and simple workarounds. As far back as 1915, the Investment Bankers Association was advising its members to sidestep restrictions by handling offerings interstate via mail.

Founding and Early Development

New Deal Securities Reforms and Enabling Statutes

The SEC's authority stems from the Securities Act of 1933 and the Securities Exchange Act of 1934, both enacted as part of President Franklin D. Roosevelt's New Deal reforms.
Following the Pecora Commission hearings, which exposed widespread abuses and fraud in the securities markets, Congress passed the Securities Act of 1933. This law introduced federal regulation of primary securities offerings across state lines, chiefly by mandating registration of distributions before sale, allowing investors to review essential financial details and decide accordingly. For its first year, enforcement fell to the Federal Trade Commission.
The Securities Exchange Act of 1934 followed, governing secondary trading—exchanges between parties typically unconnected to the original issuers. The act placed under SEC oversight entities like physical exchanges, self-regulatory organizations, the Municipal Securities Rulemaking Board, NASDAQ, alternative trading systems, and others handling transactions for clients. Section 4 created the SEC, shifting FTC authority over the 1933 Act and assigning enforcement of both laws to the new agency..

Early Leadership and Institutional Direction

In 1934, Roosevelt named his friend Joseph P. Kennedy, a self-made multimillionaire, financier, and leader among the Irish-American community, as chairman of the SEC. Roosevelt chose Kennedy partly based on his experience on Wall Street. Two of the other five commissioners were James M. Landis and Ferdinand Pecora. Kennedy added a number of intelligent young lawyers to the SEC staff, including William O. Douglas and Abe Fortas, both of whom later became Supreme Court justices.
Another early appointee was David Saperstein, a former associate counsel to the Pecora Commission who helped draft the Securities Exchange Act of 1934. As the SEC’s first director of the Division of Trading and Exchange, Saperstein oversaw broker-dealer registration, early federal rules for over-the-counter markets, and policy interpretations—such as the 1937 “Saperstein Interpretation”—that shaped the commission’s approach to market structure and conflicts of interest.
Kennedy’s team defined four missions for the new commission: restore investor confidence in securities markets; restore integrity to markets by prosecuting and eliminating fraudulent and unsound practices; end million-dollar insider trading by top officials of major corporations; and establish a universal system of registration for securities sold in the United States, with clear deadlines, rules, and guidelines. The SEC succeeded; Kennedy reassured the business community and encouraged ordinary investors to return to the market.
Later SEC commissioners and chairs included William O. Douglas, Jerome Frank, and William J. Casey.
Since 1994, most registration statements filed with the SEC can be accessed via the SEC’s online system, EDGAR.

21st century Developments

In 2019, the Securities and Exchange Commission Historical Society introduced an online gallery illustrating changes in U.S. securities market structure since the 1930s. The gallery includes a narrative history supported by documents, papers, interviews, photos, and videos.

Organizational Structure

Commission Leadership and Governance

Commission members

The commission has five commissioners appointed by the president of the United States. No more than three commissioners may belong to the same political party. Terms last five years and are staggered so that one commissioner’s term ends on June 5 of each year. Service may continue up to eighteen additional months past term expiration.
The president also designates one commissioner as chair, the SEC’s top executive. The president does not have the power to fire appointed commissioners, a provision intended to ensure the SEC’s independence.

Current commissioners

The current board members as of 2026:
PositionNamePartyTook officeTerm expires
ChairRepublican
MemberRepublican
MemberRepublican
MemberVacant
MemberVacant

Divisions

Within the SEC, there are six divisions headquartered in Washington, D.C.
The SEC's divisions are:

Corporation Finance

Corporation Finance oversees disclosure by public companies and the registration of transactions such as mergers. The division also operates EDGAR.

Trading and Markets

The Trading and Markets division oversees self-regulatory organizations such as the Financial Industry Regulatory Authority and Municipal Securities Rulemaking Board and monitors all broker-dealer firms and investment houses. This division interprets proposed regulatory changes and monitors industry operations. In practice, the SEC delegates most of its enforcement and rulemaking authority pertaining to broker-dealer firms and investment houses to FINRA. Trading firms not regulated by other self-regulatory organizations must register with FINRA. Individuals trading securities must pass FINRA-administered exams to become registered representatives.

Investment Management

The Investment Management Division oversees registered investment companies, including mutual funds, and registered investment advisors.These entities are regulated under federal securities laws.
The Division of Investment Management administers the Investment Company Act of 1940 and Investment Advisers Act of 1940. Responsibilities include:
  • assisting the commission in interpreting laws and regulations for the public and for SEC inspection and enforcement staff;
  • responding to no-action requests and requests for exemptive relief;
  • reviewing investment company and investment adviser filings;
  • assisting the commission in enforcement matters involving investment companies and advisers; and
  • advising the commission on adapting SEC rules to new circumstances.

Enforcement

The Enforcement Division investigates violations of the securities laws and regulations to bring legal actions against alleged violators. It is the largest division in terms of both headcount and budget, and its resources have been increased by more than 50% since the 2008 financial crisis. The SEC can bring a civil action in a U.S. District Court, or an administrative proceeding which is heard by an independent administrative law judge. The SEC does not have criminal authority but may refer matters to state and federal prosecutors.

Economic and Risk Analysis

The Economic and Risk Analysis Division was created in September 2009 to integrate financial economics and rigorous data analytics into the core mission of the SEC. The division is involved across the entire range of SEC activities, including policy-making, rule-making, enforcement, and examination. As the agency's "think tank", DERA relies on a variety of academic disciplines, quantitative and non-quantitative approaches, and knowledge of market institutions and practices to help the commission approach complex matters in a fresh light. DERA also assists in the commission's efforts to identify, analyze, and respond to risks and trends, including those associated with new financial products and strategies. Through the range and nature of its activities, DERA serves the critical function of promoting collaborative efforts throughout the agency and breaking through silos that might otherwise limit the impact of the agency's institutional expertise. The division's activities include providing detailed, high-quality economic and statistical analyzes, and specific subject-matter expertise to the commission and other divisions/offices and developing customized, analytic tools and analyzes to proactively detect market risks indicative of possible violations of the federal securities laws. Using data, DERA staff create analytic programs designed to detect patterns identifying risks, enabling commission divisions and offices to deploy scarce resources targeting possible misconduct. DERA also houses the commission's chief economist.

Examinations

The Division of Examinations conducts the SEC's National Exam Program. The division's mission is to protect investors, ensure market integrity and support responsible capital formation through risk-focused strategies that: improve compliance; prevent fraud; monitor risk; and inform policy. The results of the division's examinations are used by the SEC to inform rule-making initiatives, identify and monitor risks, improve industry practices and pursue misconduct.

Regional offices

There are 11 regional offices throughout the US, which are listed below along with the name of the respective regional director.

Offices and Support Functions

Among the SEC's offices are:

Communications

Comment letters

Comment letters are issued by the SEC's Division of Corporation Finance in response to a company's public filing. This letter, initially private, contains an itemized list of requests from the SEC. Each comment in the letter asks the filer to provide additional information, modify their submitted filing, or change the way they disclose in future filings. The filer must reply to each item in the comment letter. The SEC may then reply back with follow-up comments. This correspondence is later made public.
In October 2001 the SEC wrote to CA, Inc., covering 15 items, mostly about CA's accounting, including 5 about revenue recognition. The chief executive officer of CA, to whom the letter was addressed, pleaded guilty to fraud at CA in 2004.
In June 2004, the SEC announced that it would publicly post all comment letters, to give investors access to the information in them. An analysis of regulatory filings in May 2006 over the prior 12 months indicated, that the SEC had not accomplished what it said it would do. The analysis found 212 companies that had reported receiving comment letters from the SEC, but only 21 letters for these companies were posted on the SEC's website. John W. White, the head of the Division of Corporation Finance, told the New York Times in 2006: "We have now resolved the hurdles of posting the information... We expect a significant number of new postings in the coming months."

No-action letters

No-action letters are letters by the SEC staff indicating that the staff will not recommend to the commission that the SEC undertake enforcement action against a person or company if that entity engages in a particular action. These letters are sent in response to requests made when the legal status of an activity is not clear. These letters are publicly released and increase the body of knowledge on what exactly is and is not allowed. They represent the staff's interpretations of the securities laws and, while persuasive, are not binding on the courts.
One such use, from 1975 to 2007, was with the nationally recognized statistical rating organization, a credit rating agency that issues credit ratings that the SEC permits other financial firms to use for certain regulatory purposes.

Freedom of Information Act Processing Performance

In a 2015, Center for Effective Government analysis of 15 federal agencies which receive the most Freedom of Information Act requests published in 2015, the SEC was among the 5 lowest performers, earned a D− by scoring 61 out of a possible 100 points, i.e. did not earn a satisfactory overall grade. It had deteriorated from a D− in 2013.
In 2025, SEC received the highest ratings across the board in the Department of Justice's for agencies receiving more than 1000 requests.

Notable Enforcement Actions and Oversight Controversies

This section summarizes selected SEC enforcement actions, regulatory responses to market stress, and oversight controversies involving from the financial crisis era through the mid-2020s.

Crisis-era actions and major enforcement matters (2008–2012)

Regulatory Action in the Credit Crunch

On September 17, 2008, the SEC announced strict new rules to prohibit all forms of “naked short selling” as a measure intended to reduce volatility in turbulent markets.
During the same period, the SEC investigated attempts to manipulate markets by spreading false rumors about certain financial institutions. The commission also investigated trading irregularities and abusive short-selling practices. Regulators required hedge fund managers, broker-dealers, and institutional investors to disclose—under oath—certain information about their positions in credit default swaps. The commission also negotiated what it described as the largest settlements in SEC history on behalf of investors who purchased auction rate securities from six different financial institutions.
For selected major SEC enforcement actions from 2009–12, see List of major SEC enforcement actions (2009–12).

High-profile Controversies and Investigations

The SEC has been criticized "for being too 'tentative and fearful' in confronting wrongdoing on Wall Street", and for doing "an especially poor job of holding executives accountable."
Christopher Cox, the former SEC chairman, has recognized the organization's multiple failures in relation to the Bernard Madoff fraud. The SEC’s involvement with Madoff-related matters dated back at least to a 1992 investigation into a feeder fund that invested only with Madoff and that, according to the SEC, promised “curiously steady” returns. The SEC did not pursue indications that something was amiss in Madoff’s investment firm. The SEC has been accused of missing numerous red flags and ignoring tips about Madoff’s alleged fraud.
Cox later said the agency would investigate “all staff contact and relationships with the Madoff family and firm, and their impact, if any, on decisions by staff regarding the firm.” SEC assistant director Eric Swanson, from the Office of Compliance Investigations, met Madoff’s niece, Shana Madoff, while Swanson participated in an SEC examination into whether Bernard Madoff was running a Ponzi scheme; she served as the firm’s compliance attorney. The inquiry was closed, and Swanson later left the SEC and married Shana Madoff.
Surveys reported that approximately 45 percent of institutional investors believed better SEC oversight could have prevented the Madoff fraud. In 2000, Harry Markopolos contacted the SEC’s Boston office and urged staff to investigate Madoff, arguing that it was impossible to legally generate the profits Madoff claimed using the strategies he described.
In June 2010, the SEC settled a wrongful termination lawsuit with former SEC enforcement lawyer Gary J. Aguirre, who was terminated in September 2005 after attempting to subpoena Wall Street figure John J. Mack in an insider trading case involving hedge fund Pequot Capital Management. Mary Jo White, who later served as chair of the SEC, represented Morgan Stanley at the time and was involved in the matter. While the insider trading case was dropped at the time, the SEC filed charges against Pequot roughly a month before settling with Aguirre. The U.S. Senate released a report in August 2007 detailing the issue and calling for reform of the SEC.
On September 26, 2016, Democratic senator Mark Warner sent a letter to the SEC asking it to evaluate whether the disclosure regime was adequate, citing the low number of company disclosures to date.

Inspector General Scrutiny and Internal Governance Concerns (2009–2012)

In 2009, the Project on Government Oversight (POGO), a government watchdog group, sent a letter to Congress criticizing the SEC for failing to implement more than half of the recommendations made to it by its Inspector General. According to POGO, in the prior two years the SEC took no action on 27 of 52 recommended reforms from Inspector General reports and still listed 197 of 312 recommendations from audit reports as “pending.” Recommendations included imposing disciplinary action on SEC employees who received improper gifts or other favors from financial firms, and investigating and reporting the causes of the failures to detect the Madoff Ponzi scheme.
2011 article by Matt Taibbi in Rolling Stone quoted former SEC employees criticizing the SEC’s Office of the Inspector General (OIG). The article described reporting to the OIG as “well-known to be a career-killer.”
After concerns raised by former SEC chief investigator David P. Weber regarding conduct by SEC inspector general H. David Kotz, Inspector General David C. Williams of the U.S. Postal Service conducted an independent outside review in 2012. Williams concluded in a 66-page report that Kotz violated ethics rules by overseeing probes involving people with whom he had conflicts of interest due to “personal relationships.” The report questioned Kotz’s work on the Madoff investigation, among others, because it described Kotz as a “very good friend” of Markopolos. The report concluded that, while the timing of the friendship was unclear, U.S. ethics rules would have been violated if their relationship began before or during Kotz’s Madoff investigation. The report also found that Kotz “appeared to have a conflict of interest” and should not have opened his Stanford investigation because he was friends with a female attorney who represented victims of the fraud.

Records Retention and Early-stage Inquiry Files (1990s–2010)

According to former SEC employee and whistleblower Darcy Flynn—also reported by Taibbi—the agency routinely destroyed thousands of documents related to preliminary inquiries into alleged wrongdoing by Deutsche Bank, Goldman Sachs, Lehman Brothers, SAC Capital, and other financial firms involved in the Great Recession that the SEC was supposed to be regulating. The destroyed materials allegedly included records tied to “Matters Under Inquiry” (MUI), the SEC’s term for the earliest stage of the investigation process. Flynn stated that the practice began as early as the 1990s and led to conflict with the National Archives and Records Administration after it was disclosed to them in 2010. Flynn also described a meeting at the SEC in which senior staff discussed refusing to acknowledge the destruction, because doing so might have been illegal.
Iowa Republican senator Charles Grassley and others highlighted Flynn’s request for whistleblower protection and the agency’s document-handling procedures. The SEC issued a statement defending its practices. NPR quoted University of Denver Sturm College of Law professor Jay Brown as saying, “My initial take on this is it’s a tempest in a teapot,” and securities lawyer Jacob Frenkel as arguing, in effect, that there was no allegation the SEC discarded sensitive documents obtained under subpoena in high-profile cases. NPR framed the issue as a dispute over what qualifies as an “investigative record” under federal record-retention rules. Federal officials argued that no judge had ruled that papers tied to early-stage SEC inquiries are investigative records. The SEC’s inspector general stated that he was conducting a thorough investigation and would issue a report by the end of September.

Crypto-asset enforcement and tokenization developments (2021–2025)

SEC High-Profile Cryptocurrency Enforcement Against Major Firms

On June 5, 2023, the SEC filed 13 charges against Binance entities and its founder Changpeng Zhao, alleging, among other things, improper handling of customer assets and violations of registration requirements. On June 6, 2023, the SEC filed a separate action against Coinbase, alleging the company operated as an unregistered exchange, broker, and clearing agency.
A central dispute between the SEC and parts of the crypto industry concerns when a digital asset constitutes a “security.” The SEC has applied the Howey framework and has argued that certain crypto offerings meet the definition of an investment contract when purchasers expect profits based on the efforts of others. The agency has classified many crypto assets as securities based on this test, asserting that their value often depends on the efforts of developers or other central parties behind blockchain projects. Industry participants and some commentators have argued that applying Howey in this context creates uncertainty, particularly for assets and networks that aim to be decentralized.
Academic research reports recurring fraud and manipulation in cryptocurrency markets, including wash trading, coordinated pump-and-dump schemes, and trading patterns consistent with price manipulation; these practices can inflate reported volume, distort prices, and produce sharp run-ups followed by reversals that harm late-arriving traders. Studies comparing venues find indicators of wash trading and related distortions that are materially lower on more regulated trading platforms than on less regulated venues, consistent with oversight improving market transparency and market quality. Research on token offerings finds that more informative disclosure and credible intermediaries are associated with stronger fundraising outcomes and post-issuance performance, a pattern often cited in arguments for applying securities-style disclosure and anti-fraud standards to crypto-asset markets.
Research that focuses on U.S. regulatory interventions reports mixed short-run market reactions. An event-study analysis finds that SEC interventions are associated, on average, with negative abnormal returns and changes in volatility and trading activity for the named crypto assets, which the authors interpret as reflecting regulatory uncertainty and repricing of legal risk. An alternative interpretation is that the announcement effects reflect a repricing of legal and compliance risk for the named assets, rather than a deterioration in underlying fundamentals. The paper also documents heterogeneous responses by asset characteristics, which can be read as consistent with enforcement news having larger pricing effects where market frictions and risk premia are higher. In addition, evidence of elevated pre-announcement trading volume—interpreted by the authors as indicative of informed trading—has been cited as consistent with information asymmetries in crypto markets that enforcement and disclosure rules are intended to curb.Other empirical work emphasizing the prevalence of wash trading, manipulation, and information problems in crypto markets is often used to argue that clearer disclosure expectations and credible enforcement can still improve market integrity over time, even if individual interventions produce volatile or negative announcement effects.

DTCC No-action Letter on Tokenized Assets (2025)

In December 2025, the Securities and Exchange Commission provided the Depository Trust & Clearing Corporation (DTCC) with a no-action letter allowing the organization to hold and record tokenized equities and other real-world assets on blockchain networks. The authorization enables DTCC to deliver tokenization-related services on approved blockchains for a period of three years.

Public-company risk disclosure initiatives (2023–2024)

Cybersecurity Risk Disclosures
On July 26, 2023, the SEC adopted the Cybersecurity Risk Management, Strategy, Governance, and Incident Disclosure rule to encourage public companies to more transparently and effectively manage and disclose cybersecurity risk. However, according to a CIO analysis of a proposed AI disclosure rule and its connection to the earlier cybersecurity disclosure regime, some experts argue that the cybersecurity rule’s broad, materiality-based thresholds and reliance on company-defined terms create challenges for consistent reporting. Critics also note that many disclosures rely on boilerplate language and provide limited investor insight.

Climate-related disclosures for investors (2024)

In 2024, the SEC decided on a climate disclosure rule, The Enhancement and Standardization of Climate-Related Disclosures for Investors. It requires companies to disclose information on their risk to be impacted by climate change and a company's risks to profit by a growing number of climate change regulations, concerning direct and indirect greenhouse gas emissions produced.

Whistleblower Program

Program Structure and Legal Basis

The SEC runs a whistleblower rewards program, which rewards individuals who report violations of securities laws to the SEC. The program began in 2011 with the passage of the Dodd-Frank Wall Street Reform and Consumer Protection Act and allows whistleblowers to be given 10–30% of the penalties collected by the SEC and other agencies as a result of the whistleblower's information.

Awards, Recoveries, and Reporting

As of 2021, the SEC had recovered $4.8 billion in monetary remedies as a result of information obtained through the whistleblower program and had paid out over $1 billion to whistleblowers. As part of the program, the SEC issues a report to Congress each year and the 2021 report is available online.

Relationship to other agencies

In addition to working with various self-regulatory organizations such as the Financial Industry Regulatory Authority, the Securities Investor Protection Corporation, and Municipal Securities Rulemaking Board, the SEC also works with federal agencies, state securities regulators, international securities agencies and law enforcement agencies.
In 1988, Executive Order 12631 established the president's Working Group on Financial Markets. The Working Group is chaired by the secretary of the treasury and includes the chairman of the SEC, the chairman of the Federal Reserve and the chairman of the Commodity Futures Trading Commission. The goal of the Working Group is to enhance the integrity, efficiency, orderliness, and competitiveness of the financial markets while maintaining investor confidence.
The Securities Act of 1933 was originally administered by the Federal Trade Commission. The Securities Exchange Act of 1934 transferred this responsibility from the FTC to the SEC. The Securities Exchange Act of 1934 also gave the SEC the power to regulate the solicitation of proxies, though some of the rules the SEC has since proposed have been controversial.'' The main mission of the FTC is to promote consumer protection and to eradicate anti-competitive business practices. The FTC regulates general business practices, while the SEC focuses on the securities markets.
The Temporary National Economic Committee was established by joint resolution of Congress 52 Stat. 705 on June 16, 1938. It was in charge of reporting to Congress on abuses of monopoly power. The committee was defunded in 1941, but its records are still under seal by order of the SEC.
The Municipal Securities Rulemaking Board was established in 1975 by Congress to develop rules for companies involved in underwriting and trading municipal securities. The MSRB is monitored by the SEC, but the MSRB does not have the authority to enforce its rules.
The Asset Management Advisory Committee was formally established on 1 November 2019, to provide the SEC with "diverse perspectives on asset management and related advice and recommendations". Topics the committee may address include trends and developments affecting investors and market participants, the effects of globalization, and changes in the role of technology and service providers. The committee is composed of outside experts, including individuals representing the views of retail and institutional investors, small and large funds, intermediaries, and other market participants.
While most violations of securities laws are enforced by the SEC and the various SROs it monitors, state securities regulators can also enforce statewide securities blue sky laws. States may require securities to be registered in the state before they can be sold there. National Securities Markets Improvement Act of 1996 addressed this dual system of federal-state regulation by amending Section 18 of the 1933 Act to exempt nationally traded securities from state registration, thereby pre-empting state law in this area. However, NSMIA preserves the states' anti-fraud authority over all securities traded in the state.
The SEC also works with federal and state law enforcement agencies to carry out actions against actors alleged to be in violation of the securities laws.
The SEC is a member of International Organization of Securities Commissions, and uses the IOSCO Multilateral Memorandum of Understanding as well as direct bilateral agreements with other countries' securities commissions to deal with cross-border misconduct in securities markets.

Related legislation

Forms