The Securities and Exchange Commission (SEC) is a regulatory agency responsible for administering the U.S. laws regarding securities. The purpose of these laws is to ensure fair markets and to provide accurate information to investors. The major securities laws were enacted in the 1930s after the 1929 stock market crash and the anemic performance of the market in the early 1930s.

Congress passed the Securities Act of 1933 to regulate the primary market—the market for new securities. Sometimes called the "truth in issuance act," the 1933 act required a company to submit independently verified financial information, a registration statement, and a prospectus to the Federal Trade Commission.

The Securities and Exchange Act of 1934 created the Securities Exchange Commission, giving it the power to regulate the stock exchanges and the trading practices of the secondary market (a market for currently traded shares). In 1935 the...