What is SEC? Structure and operations of the SEC in financial markets

The Securities and Exchange Commission (SEC) is an agency that regulates activities related to securities and financial markets of the United States.

What is SEC?

The Securities and Exchange Commission (SEC) is an agency that regulates activities related to securities and financial markets of the United States. The SEC was established in 1934 and is currently administered by the United States Federal Government. The SEC is responsible for ensuring that the issuance and trading of securities is conducted in a fair, transparent and safe manner for investors.

Background of the birth of the SEC

The birth of the SEC stems from the economic crisis of the 1920s. During this time, private companies often used fraud, deception and false information to attract investors. and increase the value of your shares. These companies often do not provide complete and transparent financial reports, making it difficult for investors to evaluate the feasibility and sustainability of these companies.

The most famous event in this economic crisis was Black Monday on October 28, 1929, when the US stock market crashed and caused the largest economic crisis in US history. . Investors lost billions of dollars in a few hours, and millions of Americans lost their jobs.

After Black Monday, the US government began to pay attention to stock market issues and began building a legal system to monitor and manage securities activities. Under the framework of the Federal Securities Act of 1933 and the amended Federal Securities Exchange Act of 1934, the SEC was established in 1934.

With the establishment of the SEC, the US government wishes to increase transparency and fairness in securities activities, prevent fraudulent and deceptive practices, and increase investor confidence in the securities market. .

New SEC regulations require companies to provide more complete and transparent financial reports, register new securities with the SEC before selling them, and comply with disclosure regulations. disclosure information and distribution of disclosure information. In addition, the SEC is also supported by the rule of law in supervising the stock market and securities-related activities.

History of activities and outstanding achievements of the SEC

Since its founding, the SEC has carried out a variety of missions. Below are some of the SEC's notable events in its history:

·      1930s: The SEC was established following the largest economic crisis in American history, known as the "Great Depression". The SEC was created to help ensure stock market stability and avoid financial mistakes and inflation.

·      1960s-1970s: The SEC implemented new regulations on public information of listed companies, supervising the release of securities information and controlling speculation and fraud.

·      1980s-1990s: SEC continued to reform and strengthen stock market supervision. In 1984, the SEC announced new regulations to monitor and penalize trading practices that abuse inside information.

·      2000s: The SEC significantly reformed its organizational structure to meet the growing need for securities market supervision. In 2002, the Sarbanes-Oxley Act was passed, introducing stricter regulations on the financial reporting of listed companies.

·      2008: The global financial crisis broke out, the SEC continued to carry out investigations and lawsuits for violations of securities laws. The SEC also faces criticism for not having enough power to prevent stock market downturns.

·      2010: The Dodd-Frank Act is passed, introducing new securities market regulations and increasing the power of the SEC. The Act also requires listed companies to disclose details of salaries made and management appointments.

·      2020: The SEC launched investigations and lawsuits against many large technology companies, including Tesla and Alibaba, for violations related to public information and financial reporting.

·      Overall, the SEC has performed many important tasks in ensuring the stability and transparency of the US stock market. However, this organization also faces many challenges, including increased monitoring and handling of complex and diverse violations in an increasingly large and complex securities market.

SEC Activities

The SEC's role in financial markets

The SEC has an important role and responsibility in supervising and managing the US securities market. The following are the roles and responsibilities of the SEC:

·      Protect investors by ensuring that SEC-registered companies provide adequate information about their investment products, ensuring transparency and minimizing investor risk.

·      Promote transparency by requiring companies listed on US stock exchanges to provide transparent information about their finances, products, services, management, and business performance.

·      Securities market supervision includes exchanges, investment consulting organizations, securities companies, investment funds, and other related partners. The SEC has the right to require these organizations to provide information and comply with securities-related regulations.

·      Regulates the securities market through related activities including regulations on registration and approval of new securities, regulations on bond, options, and other complex financial product markets.

·      Handle violations of securities laws, including violations of disclosed information, fraud, abuse of confidential information, and other fraudulent acts. The SEC may impose sanctions, including fines, debarment, and other measures, against violators or entities.

·      Ensure the safety and stability of the financial system by monitoring activities related to securities and other financial counterparties, ensuring transparency and minimizing risks.

·      Collaborate with other agencies such as the Federal Reserve (FED), Bureau of Labor Statistics, Internal Revenue Service, and the Organization for Economic Cooperation and Management. Organization for Economic Cooperation and Development).

·      Training and educating investors through materials to help investors better understand securities-related regulations and how to invest safely and effectively.

·      Propose new regulations to improve supervision and management of the US securities market. These new regulations may include provisions on investor protection, information disclosure, and new financial products.

In summary, the SEC has an important role and responsibility in supervising and regulating the US securities market, protecting the interests of investors, ensuring transparency and minimizing risk, and ensuring safety and security. stability for the US financial system.

Powers of the SEC

The SEC has the right to take measures to supervise and handle violations of companies in the financial and securities sectors. Some of the actions the SEC can take against companies include:

·      Check the accounts of companies providing financial statements and balance sheets to check the validity and transparency of financial information.

·      Request information about their financial and securities activities to ensure transparency and regulatory compliance.

·      Penalties for violations include fines, revocation of operating licenses and/or criminal prosecution of relevant individuals.

·      Place sanctions on companies that seriously violate SEC regulations to prevent these companies from conducting financial and securities activities in the United States.

SEC Sanctions

The SEC will have many measures to punish violators, below are 2 main methods:

·      Issue bans from now to the future. In some cases, the SEC may also seek an injunction or suspension of an individual from acting as a manager or director.

·      Civil fines and recovery of illegal profits. The fine can range from several tens of thousands to several hundred million dollars depending on the severity of the sentence.

A person or company that does not comply with the ban will be fined or imprisoned for disrespecting the court.

Structure and leadership of the SEC

General structure

The SEC has a complex organizational structure with departments and highly specialized staff. SEC agencies include:

The SEC Chairman is the head of the board of directors. This position is appointed by the President and confirmed by the Senate. The Chairman is responsible for overseeing the activities of the SEC and ensuring transparency and fairness in the securities markets.

The membership of the Commission consists of five committee members, appointed by the President and confirmed by the Senate. These members are responsible for making important policy and management decisions of the SEC. They are also involved in reviewing and approving new regulatory and policy proposals.

The SEC's authorities include many authorities, including the Office of Inspection, the Office of Investigations, the Office of Legal Counsel, and the Office of Accounting. Each of these agencies is responsible for overseeing various securities activities and providing advice on new regulations and policies.

The SEC's committees include the Open Markets Committee, the Securities and Investment Banking Committee, the International Finance Committee, and the Policy Advisory Committee. Each of these committees is responsible for overseeing various securities activities and providing advice on new regulations and policies.

In addition to the members of the Commission, the SEC includes other senior officials, including the Executive Director, Deputy Executive Directors, and bureau directors. These senior officials are responsible for overseeing operations at the SEC.

SEC Division and Office Structure

The US Securities Commission (SEC) is controlled by 1 Chairman and 4 Commissioners, which will be divided into 6 Divisions, 24 Offices and 11 Offices in other localities.

The corresponding departments and roles are:

Division of Enforcement: responsible for verifying and monitoring violations of securities laws.

Division of Investment Management: oversees asset management companies and investment funds.

Securities evaluation (Division of Corporation Finance): evaluates financial information of companies listed on the stock exchange.

Liquidity and Securities (Division of Trading and Markets): monitors trading activities on the stock market and brokers.

Division of Investment Advisory and Public Policy: provides advice on securities regulation and policy advice.

Division of Economic and Risk Analysis: research and evaluation of SEC policies and regulations.

Under the chairman's chair there will be 24 affiliated offices including:

·      Chief Accountant (Chief Accountant)

·      Chief Operating Officer

·      Credit Ratings

·      Equal Employment Opportunity

·      Ethics Counsel

·      General Counsel

·      International Affairs

·      Investor Advocate

·      Investor Education and Advocacy

·      Legislative and Intergovernmental

·      Minority Issues and Women Inclusion (Affairs Minority and Women Inclusion)

·      Municipal Securities (Municipal Securities)

·      Public Affairs

·      Secretary (Secretary)

·      Strategic Hub for Innovation and Financial Technology

·      Acquisitions

·      EDGAR Business Office (EDGAR Business Office)

·      Financial Management

·      Human Resources

·      Information Technology

·      Support Operations

·      Advocate for Small Business Capital Formation

·      Administrative Law Judges (Administrative law judges)

·      Inspector General

To easily operate throughout the United States, the SEC also has offices in 11 other states: Atlanta, Boston, Chicago, Denver, Fort Worth, Los Angeles, Miami, New York, Philadelphia, Salt Lake, San Francisco.

SEC Chairman and perspective on Crypto

SEC Chairman Gary Gensler

Currently, Gary Gensler is the chairman of the SEC. He has experience as an economics professor at MIT and has extensive experience in finance and policy, including working at the International Trade Administration, the US Financial Markets Authority and as an expert. for the US House and Senate.

Each term of the SEC chairman will last 5 years. Gray has held this position since 2021, and his term will expire in 2026.

SEC chairman's perspective on the Crypto market

For him, the Crypto market is a dangerous and risky market. Up to now, he only recognizes that Bitcoin is not a security but a commodity (Commodity), and all other Cryptocurrencies are in his sights for investigation.

He said that the Cryptocurrency market needs to comply with the decisions made as well as report to the SEC all company activities. For example, token issuance activities, ICO activities, SAFT sales, staking on the exchange,...

Up to now, he is also the director of many accusations:

·      The SEC accuses Ripple, FTT and 9 other tokens on Coinbase of being securities

·      The SEC sued the hacker who attacked Mango Market and claimed that MNGO was a security

·      SEC sues Paxos claiming that BUSD is a security

In general, the current SEC chairman has a negative perspective on Crypto, which is also facing opposition from the SEC leaders themselves. However, they do little to change the SEC's stance, at least for the time being.

Conclusion

The SEC has played an important role in protecting transparency and fairness in the securities markets. With its diverse functions and responsibilities, the SEC has helped increase the reliability of the securities market and reduce risks for investors.

The SEC has also achieved many significant achievements in ensuring transparency and fairness in the securities market. However, the SEC still faces many challenges and needs to continuously improve its operational efficiency to meet the needs of the future securities market.