56 Journal of Regulatory Compliance Issue II
public’s faith in the stock market and investing. 20 In 1933, during the
pinnacle of the Great Depression, Congress passed the Securities Act of
193321 to begin rectifying the under-regulated securities industry that led to
the crash. The Securities Act of 1933 requires that all securities in U.S.
interstate commerce offered for sale must be registered with the SEC or
qualify for an exemption from registration. 22 The following year the
Securities Exchange Act of 193423 was passed to create the SEC, to regulate
the subsequent securities distributions after initial sales, and to implement
reporting requirements for publicly held corporations. 24 Upon its creation,
the SEC enforced the new securities laws, stopped volatility in the markets,
and protected investors. Together, these two laws made a vast difference in
investors’ confidence in the United States’ capital markets. 25
There are five divisions of the SEC: Division of Corporation Finance, 26
Division of Trading and Markets, 27 Division of Investment Management, 28
Division of Enforcement, 29 and Division of Economic and Risk Analysis. 30
The President of the United States appoints five SEC commissioners that
each have five year terms with no more than three commissioners from one
political party. 31 The SEC is truly a law enforcement agency that can file
either an administrative action or a civil action. 32 SEC civil actions are filed
with a U.S. District Court whereas administrative actions are heard by an
SEC administrative law judge (“ALJ”). 33 The SEC can affirm decisions
made by the ALJ, reverse it, or remand it for further proceedings. 34 The SEC
20. S. Res. 84, 72d Cong. (1932); S. Res. 54, 73d Cong. (1933); S. Res. 97, 73d Cong.
(1933); S. Rep. No. 1455 (1934).
21. Securities Act of 1933, 15 U.S.C. § 77a et seq.
23. Securities Exchange Act of 1934, 15 U.S.C. § 78a et seq.
25. What We Do, supra note 19.
26. Division of Corporate Finance, U.S. SEC. & EXCHANGE COMMISSION,
https://www.sec.gov/page/corpfin-section-landing (last updated Jan. 31, 2017).
27. Trading and Markets, U.S. SEC. & EXCHANGE COMMISSION,
https://www.sec.gov/page/tmsectionlanding (last updated Jan. 30, 2017).
28. Investment Management, U.S. SEC. & EXCHANGE COMMISSION,
https://www.sec.gov/investment (last updated Feb. 3, 2017).
29. Division of Enforcement, U.S. SEC. & EXCHANGE COMMISSION,
https://www.sec.gov/enforce (last updated Apr. 14, 2015).
30. Economic and Risk Analysis, U.S. SEC. & EXCHANGE COMMISSION,
https://www.sec.gov/dera (last updated Jan. 17, 2017).