[Economics Report]:Securities and Exchange Commission


This is Doug Johnson with the VOA Special English EconomicsReport.

In the United States, people who put their money in banks areusually protected if the bank ever fails. They are guaranteed to gettheir money back, up to one-hundred-thousand dollars. Financialmarkets offer no guarantees. That is why the Securities and ExchangeCommission exists. The S-E-C is an independent government agencyformed to protect investors.

The need grew out of the stock market crash ofnineteen-twenty-nine. Many Americans lost trust in financialmarkets. The Great Depression soon followed.

In nineteen-thirty four, Congress established the Securities andExchange Commission. President Bush chose William Donaldson, aninvestment banker, as the current chairman last December.

The commission has five members, including the chairman. At most,three of the five may be of the same political party. The presidentappoints the commissioners, with Senate approval. Their job is toestablish and enforce rules for financial markets.

The S-E-C has four divisions. One is the Division of CorporationFinance. It requires public companies to report on their financialcondition and any issues that could affect investors.

The Division of Market Regulation oversees the private groupsthat supervise financial markets. Stock exchanges and groups likethe National Association of Securities Dealers are self-governing.But, because their work involves public trust, the S-E-C plays apart.

The Division of Investment Management oversees investmentcompanies and dealers. Its areas include the mutual fund industry.Chairman Donaldson recently called for changes to prevent some kindsof trading in mutual funds. Officials say some traders use thesemethods to help only big investors.

And, the Division of Enforcement investigates violations of laws.The commission can bring charges, but often reaches agreements toavoid a trial. On October first, for example, the S-E-C reached adeal with J.P. Morgan Securities. The company agreed to pay a fineof twenty-five million dollars in a case, but did not have to admitor deny guilt.

The S-E-C can only enforce civil laws. But it works with agenciesthat enforce criminal laws. In some cases, the S-E-C may work withthe attorney general of a state to bring charges.

This VOA Special English Economics Report was written by MarioRitter. This is Doug Johnson.

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