The U.S. Securities and Exchange Commission (SEC) is an independent, nonpartisan, quasi-judicial regulatory agency that is responsible for administering federal securities laws. The main objective of these laws is to protect investors in securities markets in the United States from fraud and other dishonest activities. The laws are designed to ensure that securities markets operate fairly and that investors have access to disclosures of all material information concerning publicly traded securities.

Congressional investigations of the collapse of the stock market in 1929 and the subsequent Depression found that investors suffered heavy losses for two major reasons. First, many companies had failed to disclose relevant information. Second, many misrepresentations of financial information had been made to the investors. The SEC was created to provide oversight in an attempt to prevent such a situation from arising again.

The SEC regulates firms engaged in the...