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Securities and Exchange Commission

The SEC is the federal agency charged with regulating and overseeing the U.S. stock market and public companies.

Expanded Definition

The SEC, headed by five appointed members, was created under the Securities Exchange Act of 1934 in the aftermath of The Great Depression, when it became clear that confidence in the capital markets needed to be restored.

In its own words: "The mission of the U.S. Securities and Exchange Commission is to protect investors, maintain fair, orderly, and efficient markets, and facilitate capital formation." [1] It tries to ensure that all investors, regardless of size or importance, have access to certain facts about a company in which they wish to invest in or are already invested in. To provide this, it requires companies to disclose certain facts in a timely and consistent manner, such as how much it earned, what its expenses were, its assets and liabilities, its sources of capital, debt obligations, etc. This results in a more transparent market, more informed investment decisions, and better allocation of capital within the market.

Not only does it oversee public companies, to make sure that they disclose important information in a timely fashion, but it oversees the exchanges, the brokers and dealers, investment advisors, and mutual funds. It has the authority to bring civil charges against those breaking the rules and imposing fines.

As part of its efforts to create easy access to company information, it has created the IDEA resource (formerly Edgar), found at | http://idea.sec.gov/. Electronic versions of every filing from 1994 a company or prominent individual must file can be found here. This includes things beyond the 10-K or 10-Q filed by companies. Stuff like mutual fund voting records and major investors' holdings can be found here.

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