New York Stock Exchange.
A security is a financial investment, such as a stock or a bond. There are many other types of securities, such as derivatives and treasury notes. These securities are bought and sold on financial markets, and the markets need regulation to protect the investor. The Securities and Exchange Commission (SEC) is the federal agency that regulates the securities market in the United States. It regulates the exchange of American or foreign stocks on U.S. markets.
Securities And Exchange Commission
The SEC was created during The Great Depression to restore investors’ confidence in the financial markets. Its chief concern is to oversee the disclosure of financial information, to maintain fairness and to protect investors against fraud. It also supervises professionals and organizations in the financial markets.
Laws
There are several laws governing financial disclosure. The most important are the following:
The Securities Act of 1933 was the first law to require the disclosure of financial information to investors. It requires that securities register with the SEC and describe the security, the issuing company and its management, and to file financial statements.
The Securities Act of 1933 established the SEC and required registered companies to report regularly to that agency.
The Sarbanes-Okley Acy of 2002 was a law reforming financial regulation and enhancing corporate responsibility and enhancing financial disclosure.
The Filings
There are many dozens of filings required by the SEC. In general, the most important are these:
Annual reports (10-K’s) include the company’s financial statements: balance sheets, income statements, and cash flow statements.
Quarterly reports (10-Q’s) must be filed every three months. They summarize the business’s activities for the last quarter.
Proxy statements solicit the votes of investors. They must include all important information on the issues involved.
Prospectuses describe a security that’s being offered for sale.
Current reports (8-K’s) describe significant corporate events, such as acquisitions and changes in corporate governance.
Delivery
Most important filings filed can be accessed directly from the SEC on its website. The database is called Edgar. If you type in the name of a business, it will return all that company’s filings since 1996. You can filter results by form type. For more complex searches, there are various other search screens on Edgar.
Forms that haven’t been filed electronically can be ordered with an online form or by mail. In addition, there are a number of companies that will deliver the forms to you.
Use
SEC filings are indispensable for the investor. They are the chief tools he has in making decisions about which securities to buy or sell. Financial professionals rely heavily on the SEC for the same reason.
Corporate management needs this information to make decisions about the company's activities and to monitor its industry and competitors.
Tags: financial markets, decisions about, describe security, disclosure financial, disclosure financial information