1: Compliance
Enforce Compliance with Federal Securities Laws Other Information:
Congress designed the nation’s federal securities laws to instill investor confidence in the capital markets. By providing
a formalized structure and government oversight, these laws carefully balance the desire for open,accessible, and competitive
markets with the need to protect investors. Among other things, they impact:- Public offerings of securities;- Periodic reporting
by companies with registered securities;- Mergers and acquisitions; - Corporate governance; - Securities trading; and- The
activities of entities such as exchanges, broker-dealers, depositories, clearing agencies, transfer agents, investment companies,
and investment advisers. The SEC works to both enforce the laws and promote compliance. With regards to the SEC’s enforcement
authority, the Commission seeks to detect violations quickly, publicize misconduct where appropriate to alert investors to
possible wrongdoing, and take prompt action to halt the misconduct and its effects. SEC staff uncover securities violations
through many sources, including surveillance activities, research and data analysis, tips and complaints from the public,
the media,and the agency’s examination and disclosure review programs. Each year, the SEC brings hundreds of civil enforcement
actions against individuals and companies for non-compliance with the securities laws. Depending on the type of conduct involved
and the venue of the proceeding, the agency can seek a wide range of remedies. These include civil injunctions, orders requiring
special actions (such as audits, accounting for frauds, or special supervisory arrangements), civil monetary penalties and
disgorgement of illegal profits, orders that bar or suspend an individual from serving as a corporate officer or director,
censures,industry bars, or suspensions or revocation of the registration of regulated entities such as broker-dealers and
investment advisers. The Commission also is empowered to halt trading in securities where there is inadequate public disclosure.
The SEC works with the Department of Justice as part of the President’s Corporate Fraud Task Force to file and prosecute criminal
charges against violators, and has established more than 30 formal arrangements with foreign counterparts for information
sharing and other forms of cooperation to investigate and prosecute securities law violations. Such actions can help deter
violations of the securities laws from occurring in the first place. But the SEC also works aggressively on a variety of additional
fronts to reduce the probability that violations will occur and to detect problems before they become severe or widespread.
For example,the agency works with industry participants to explain the intent and requirements of securities laws and regulations,providing
guidance before activities are undertaken that could result in violations. These interactions range from phone calls requesting
interpretive guidance to formal written requests for exemptive or no-action relief. The SEC also conducts examinations and
inspections to address compliance problems. Working together with firms and their compliance officers, examiners can help
identify areas where entities can improve internal controls and other compliance mechanisms. When necessary, the examination
program refers any potentially serious violations it uncovers to the SEC’sDivision of Enforcement, or when appropriate to
the registrant’sself-regulatory organization, for further investigation. A vigorous disclosure review program helps prevent
violations by shining a spotlight on an issuer’s business and financial condition. By upholding requirements for the broad
and timely dissemination of material information, this program ensures that everyone, including the individual investor, learns
important information, such as earnings results, at the same time. The SEC further promotes compliance by actively monitoring–
and requiring others to monitor – the condition of firms or the markets as a whole. For example, the Commission conducts research,
analysis, and surveillance to identify factors impacting the markets, uncover non-compliant practices,and ensure that firms
are addressing issues before undue risk adversely affects investors. Furthermore, the SEC requires that registrants actively
monitor and report certain activities and that the SROs and company board committees who oversee compliance maintain their
independence. The Commission’s activities in these areas also have an additional benefit. By promoting full disclosure of
firms’activities, the SEC gives investors the tools they need to make better-informed investment decisions. As a result, securities
industry participants have a powerful incentive to comply with the laws and regulations that govern their practices.
Objective(s):
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