Securities & Exchange Commission (SEC)

Definition

The SEC is an independent federal government regulatory agency responsible for protecting investors, maintaining fair and orderly functioning of securities markets, and facilitating capital formation.

Analogy

Imagine if your school had no rules about cheating on tests. Some students might get away with it while others would be unfairly disadvantaged. The SEC is like your school's honor code - it sets rules for fairness and punishes those who break them in financial markets.

Related terms

Stock Market Crash of 1929: A major stock market crash that occurred in late October 1929 which started the Great Depression.

Regulation: A rule or directive made and maintained by an authority.

Investor Protection Act (2010): An act designed to expand investor protections by improving quality information.