The U.S. Securities and Exchange Commission (SEC) was created in 1934 and consists of five commissioners and a staff of approximately 1,900. The SEC professional staff is organized into four divisions and several principal offices. The primary objectives of the SEC are to support fair securities markets and to foster enlightened shareholder participation in major corporate decisions. The SEC has a significant presence in financial markets and corporation-shareholder relations and has the authority to exert significant influence on entities whose actions lie within the scope of its authority. The SEC chairman has identified enforcement cases and full disclosure filings as major activities of the SEC.

Required

1. The SEC must have some “license” to exercise power. Explain where the SEC receives its authority.

2. Explain, in general, the major ways in which the SEC:

a. Supports fair securities markets.

b. Fosters enlightened shareholder participation in major corporate decisions.

3. The major responsibilities of the SEC’s Division of Corporation Finance include full disclosure filings. Describe the means by which the SEC attempts to assure the material accuracy and completeness of registrants’ financial disclosure filings.