Investor Bulletin: An Introduction to the U.S. Securities and Exchange Commission – Organization and Mission
Aug. 20, 2015
The SEC’s Office of Investor Education and Advocacy is issuing this Investor Bulletin to provide investors with a general overview of the SEC’s mission, responsibilities, and organizational structure.
The SEC is a U.S. federal government agency that has a three-part mission:
- protect investors;
- maintain fair, orderly, and efficient markets; and
- facilitate capital formation.
In keeping with its mission, the SEC has the responsibility to:
- interpret and enforce federal securities laws;
- issue new rules and amend existing rules;
- oversee the inspection of securities firms, brokers, investment advisers, and ratings agencies;
- oversee independent and self regulatory organizations in the securities, accounting, and auditing fields; and
- coordinate U.S. securities regulation with federal, state, and foreign authorities.
Organization of the SEC
The SEC consists of five presidentially-appointed Commissioners, with staggered five-year terms (see SEC Organization Chart; text version also available). The President designates one of these Commissioners as Chairman – the agency’s chief executive. By law, no more than three of the Commissioners may belong to the same political party. The agency’s organizational structure consists of five Divisions and 23 Offices headquartered in Washington, D.C., and 11 Regional Offices throughout the country.
Division of Enforcement
The Division of Enforcement investigates and prosecutes violations of the Federal securities laws and regulations. The SEC has authority to bring civil charges in federal court or in administrative proceedings before an administrative law judge. In addition, the Division of Enforcement coordinates with the Department of Justice and other authorities that may bring criminal cases when appropriate.
Division of Corporation Finance
The Division of Corporation Finance seeks to ensure that investors are provided with material information about a company’s financial condition and business operations in order to make informed investment decisions, both when a company initially offers its securities to the public and on an ongoing basis as it continues to give information to the marketplace. Through the Division of Corporation Finance’s filing review process, the staff evaluates whether public companies have fulfilled their disclosure obligations and seeks to improve the quality of the disclosure. The staff also provides interpretive assistance to companies with respect to SEC rules and forms and makes recommendations regarding new rules and revisions to existing rules.
Division of Investment Management
The Division of Investment Management works to protect investors, promote informed investment decisions, and facilitate appropriate innovation in investment products and services through regulating the asset management industry. The Division is responsible for the Commission's regulation of investment companies, variable insurance products, and federally registered investment advisers. Types of investment companies include mutual funds, closed-end funds, business development companies, unit investment trusts, and exchange-traded funds. The Division carries out its mission by focusing primarily on guidance, disclosure, rulemaking, and risk monitoring and analysis.
Division of Trading and Markets
The Division of Trading and Markets oversees several major securities market participants, including: the securities exchanges (e.g., NYSE and NASDAQ), securities firms (e.g., broker-dealers), self-regulatory organizations (e.g., FINRA, the Municipal Securities Rulemaking Board and clearing agencies that help facilitate trade settlement), transfer agents that maintain records of securities owners, and securities information processors.
Division of Economic and Risk Analysis
The Division of Economic and Risk Analysis provides economic analysis, risk assessment, and data analytics expertise to the SEC’s Divisions and Offices in support of policy development, rulemaking, enforcement, and examinations.
The SEC has 23 Offices that provide a variety of services to the agency. Some of these offices and the services they provide include:
- The Office of Compliance Inspections and Examinations administers the SEC’s nationwide examination and inspection program for self-regulatory organizations, broker-dealers, transfer agents, clearing agencies, investment companies, and investment advisers. The office conducts inspections to foster compliance with the securities laws, to detect violations of the law, and to keep the SEC informed of developments in the regulated community.
- The Office of the Chief Accountant serves as the principal adviser to the SEC on accounting and auditing matters. The office assists in the development of accounting and auditing policies and oversees the private sector standard-setting process and the Public Company Accounting Oversight Board, an independent regulator that oversees the auditing profession.
- The Office of International Affairs assists in the development and implementation of the SEC’s international regulatory and enforcement initiatives. The office has responsibility for negotiating and managing the implementation of bilateral and multilateral agreements with foreign securities regulators on subjects such as regulatory cooperation and enforcement assistance.
- The Office of Investor Education and Advocacy carries out various investor outreach initiatives to educate investors about the securities markets and to warn them about potential scams and fraud. The office also responds to various securities-related questions, complaints and suggestions from members of the public.
- The Office of the Investor Advocate promotes the interests of investors by: assisting retail investors in resolving significant problems they may have with the SEC or self-regulatory organizations; identifying areas in which investors would benefit from regulatory changes and proposing appropriate regulatory changes to the SEC and Congress; identifying problems with financial service providers and investment products; and analyzing the potential impact on investors of proposed rules and regulations.
For additional educational information for investors, see the SEC’s Office of Investor Education and Advocacy’s homepage and the SEC’s Investor.gov website. For additional information about the SEC’s history, mission and organization structure, also see:
- SEC Webpage: “The Investor’s Advocate: How the SEC Protects Investors, Maintains Market Integrity, and Facilitates Capital Formation”