Candlestick Trading Blog
February 16, 2010
Securities and Exchange Commission
| The Securities and Exchange Commission (SEC) is the government agency that is the first line of responsibility for the oversight of the securities industry in the United States. The Securities and Exchange Commission oversees each stock exchange and the options markets. It is the SEC that oversees online trading, the online stock market, and says how much has to be in a margin account for traders to continue day trading. The SEC has been around since 1934 when it was created to oversee the stock market after the market crash in 1929 and the ensuing Great Depression. The SEC is under a lot of pressure and still receiving criticism today for an apparent lack of sufficient oversight leading up to the most recent stock market crash and worst set of American economic conditions since the Great Depression. The SEC provides a number of services important to the stock investor. For example the SEC requires that all companies listed on all stock markets submit quarterly and annual financial statements detailing the performance of their companies and a narrative statement regarding the past quarter or year. The overall purpose is to make stock market investing fair for all investors and traders. Typically all companies send these reports to everyone that owns shares of stock in a company. Anyone else can use the SEC’s EDGAR database to access company reports. Although the SEC will investigate complaints of fraud and other abuse they will never comment on ongoing investigations. The Securities and Exchange Commission is empowered to investigate all cases of potential abuse in the stock market and can prosecute civil cases. The SEC works with law enforcement agencies when criminal matters arise. Insider trading is perfectly legal but it needs to be reported to the SEC and is available in the database. The granting of stock options to employees is also legal but can cross over into gray areas in the SEC’s jurisdiction. The day trader, someone interested in value investing, and the like need never give much thought to the SEC or its activities. However, when officers of a company with insider information buy stock or sell stock based upon such privileged information it is illegal and, when caught, need to deal with the Securities and Exchange Commission. The SEC’s jurisdiction is not over those making stock market investments. It is over the stock exchanges, companies that trade on them, and the brokers and dealers who conduct trading. The reason that the SEC investigates questions of illegal insider trading is that the SEC is charged with making sure that all stock market information is equally available to all investors. Successful stock market strategies are based upon the assumption that the system, albeit volatile at times, is basically fair. Stock market trading tools, likewise, depend upon their stock market analysis of past market events being applicable to future events. The SEC may be seen as a thorn in the side of those interested in taking advantage of their managerial positions to illegally gain profit. However, the Securities and Exchange Commission and its work is what helps traders benefit from the market. Online Stock Market Reviews presented live via the internet by Stephen Bigalow |
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