The SEC and You: WhatYou Need to Know

The United States Securities and Exchange Commission is charged with the task of enforcing federal securities laws, including all laws regulating stocks and options in the country. The Securities and Exchange Commission was formed by the Securities Exchange Act of 1934 and is commonly known as the SEC (not to be confused with the organization that oversees the Southeast region of the country in college football).

The Ideal of the SECThe SEC was formed because the so-called “blue sky laws” to not have the reach to inshore fair and balanced trade along the nationally and internationally recognized stock changes. Many people with enough money found that they could simply ignore these state-sponsored laws and set the scales of power on the exchanges in their favor at will. Before the implementation of the SEC, there were numerous hearings on abuses on interstate frauds without a great deal of consequence to the perpetrators.In the ideal, the SEC is a nonpartisan entity that views all investors in the same light. The entire purpose of the organization is to set a standard for behavior within stock and options exchanges. As you will see in the next section, this structure does not necessarily hold in the current practice of the FCC.

The Reality of the SEC TodayIn reality, the laws and bylaws that set up the SEC back in the 1930s to not have a great deal of sway over the organization today. For instance, in order to remain nonpartisan, the commissioners of the organization must be spread equally among the dominant political parties. What usually ends up happening is that SEC commissioners are highly influenced by the political parties that put them there. The president of the United States also gets to appoint the chairman of the commissioners; however, this appointment is definitely influenced by the politics of the White House.

Policy in the SEC today is definitely influenced by politics, which is to say that it is influenced by money. Decision-makers within the major divisions of the SEC are almost always appointed and elected by powerbrokers in the major dominant political parties. Because Supreme Court decisions have created a monetary barrier between the average citizen of the United States and any influence in politics, the SEC is little more than a mirror of elite society.If you are looking down the barrel of an SEC investigation, it is best if you call in all of your political favors. If the “investigations” of 2008 have anything to say about it (there were no arrests made of any bankers who caused that housing crisis), political favors are really all you need to know about the SEC today.

This post was repurposed for distribution.

To read more news and updates from Jeff Ramson, go to http://jefframson.com.