SEC Act: US Congress Adopts Security Exchange Act in 1934 - Research Paper

Introduction

The securities exchange commission (SEC) act is also referred to as the security exchange act. The act was adopted in 1934 by the US Congress after which they used it to formulate SEC (SEC.gov, 2019). The fundamental objective of adopting the act was to give SEC the powers and authority to handle all the issues pertaining to the securities industry in the US. In addition, security exchange act empowers SEC to sanction all the businesses and individuals that violate the code of behavior stipulated by the US authorities within the securities exchange market (SEC.gov, 2019). Furthermore, the commission is mandated to ask for regular reports from organizations that have publicly traded securities as a way of tracking their progress and their mode of conducting business. The security exchange act indicates that companies that own assets amounting to $10million or more and whose stocks have been purchased by more than five hundred people, ought to submit yearly reports as well as other regular reports to SEC(SEC.gov, 2019). After acquiring the reports, the commission publishes them on Electronic Data Gathering, Analysis, and Retrieval system (EDGAR) for the public to see (SEC.gov, 2019).

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Additionally, securities exchange act gives SEC the authority to register, control as well as monitor the activities of brokerage companies, clearing agencies, self-regulatory firms within the US as well as transfer agents. Some of the self-regulatory organizations regulated by the SEC include the New York Stock Exchange and Chicago Board of Options among others (SEC.gov, 2019). The security exchange act also controls the exposure in materials utilized by shareholders to solicit for votes from their fellow shareholders during the yearly and special meetings conducted to elect directors or approve certain organization actions (SEC.gov, 2019). The information is found within the proxy materials, which ought to be filed with SEC prior to solicitation in order to avoid any violations of disclosure the regulations. Furthermore, the act requires all the shareholders ought to reveal all crucial facts related to the matters that shareholders are expected to vote.

On matters regarding tender offers, the SEC act expects all individuals looking forward to purchasing over five percent of companies' shares directly or through tender offers. These offers are extended with the aim of getting control of the firm. in addition, during the tender offer events, shareholders can make rational decisions regarding corporate events with the help of the proxy rules.

Dodd franc act refers to a finance reform legislation that was adopted by the Obama government as a way of responding to the 2008 financial crisis. Different provisions of the act were to be implemented in a span of several years with an objective of lowering the different risks affecting the US financial systems. One of the things the Dodd-Frank act added was the whistleblower office. This office is essential in providing information on the violations of securities laws by individuals or organizations. Whistleblowing helps SEC in the enforcement of laws that assist them in dealing with fraud as well as other economic crimes before they happen thus boosting the safety of the investors and the integrity of the US capital markets (SEC.gov, 2019). Secondly, Dodd-Frank added the minority as well as women inclusion office to address all issues linked to diversity within management, entrepreneurial activities as well as employment within the SEC. this has allowed SEC to use a diversified workforce to accomplish its mission.

References

SEC.gov, (2019). The Laws That Govern the Securities Industry. Retrieved from https://www.sec.gov/answers/about-lawsshtml.html