SEC
Securities and Exchange Commission — the US federal agency responsible for regulating the securities industry, enforcing securities laws, and protecting investors.
Example
“The SEC charged the executive with insider trading, seeking disgorgement of profits and a lifetime ban from serving as an officer of a public company.”
Memory Tip
SEC = Securities and Exchange Commission. The cop on Wall Street. Regulates and enforces.
Why It Matters
The SEC protects your investments by ensuring companies provide accurate financial information and preventing fraud. Understanding the SEC helps you know that your stock purchases and investment accounts are regulated by a government body working to maintain fair and transparent markets.
Common Misconception
Many people think the SEC guarantees their investments will make money or that it prevents all stock losses. In reality, the SEC only ensures fair disclosure and enforces rules; it does not prevent market downturns or guarantee investment returns.
In Practice
When you buy shares of a company through your brokerage account, the SEC requires that company to file quarterly financial reports showing revenue, expenses, and other key metrics. For example, if a public company claims to have 10 million customers but the SEC discovers through investigation that they actually have 2 million, the SEC can fine the company and require restatement of their financial reports to protect investors.
Etymology
Acronym for Securities and Exchange Commission. Created by the Securities Exchange Act of 1934 after the 1929 crash.
Common Misspellings
Track markets & get real-time stock data
Related Terms
More in markets
Other markets terms you should know
See Also
Need financial definitions?
Clear definitions for 2,500+ finance, insurance, and investing terms.