SEC

Definition

The Securities and Exchange Commission (SEC) is a U.S. government agency responsible for regulating the securities industry and enforcing federal securities laws. It aims to protect investors, maintain fair markets, and facilitate capital formation.

5 Must Know Facts For Your Next Test

1. The SEC requires public companies to disclose financial information to ensure transparency.
2. It enforces laws against market manipulation and fraud.
3. The SEC oversees key participants in the securities world, including exchanges, brokers, and dealers.
4. It plays a crucial role in maintaining investor confidence by ensuring accurate financial reporting.
5. The SEC's regulations influence how management accountants prepare financial statements.

Review Questions

• What is the primary purpose of the SEC?
• How does the SEC ensure transparency in financial markets?
• Why is the SEC important for managerial accountants?

Related terms

GAAP:

Generally Accepted Accounting Principles are standardized guidelines for financial accounting used in the U.S.

FASB: The Financial Accounting Standards Board develops accounting standards that guide GAAP.

Sarbanes-Oxley Act:

A law passed to protect investors from fraudulent financial reporting by corporations.