Course 103: The SEC and Regulation of the Stock Market
The Division of Enforcement
In this course
1 Introduction
2 The Division of Corporate Finance
3 The Division of Market Regulation
4 The Division of Investment Management
5 The Division of Enforcement

This division is the policing arm of the SEC, responsible for enforcing all the various securities laws and investigating violations. It became a separate division only in 1972 (before that, the other divisions enforced their own laws), but today it's probably the most active division of the SEC. The explosion in popularity of the Internet has resulted in a proliferation of Internet-based investment scams, which the Division of Enforcement has made a concerted effort to control. One of the scams involves illegal "touting" of small-cap stocks on the Internet. Touting a stock means promoting it, often with outlandish claims for its future potential, without revealing that you are being paid to do so by the company.

In addition to these four divisions, there are two offices of the SEC that serve important functions. The Office of the General Counsel is the legal arm of the SEC, representing it in court cases and providing general legal advice. The Office of Compliance Inspections and Examinations makes sure that stock exchanges, brokers, and investment advisers are complying with securities laws by conducting regular examinations and inspections. It's a sort of middleman between the first three divisions described above (which make the rules) and the Division of Enforcement (which enforces them). All the various parts of the SEC work together to try to make the U.S. securities markets operate as fairly and openly as possible.

Next: The Quiz >>


Search
Print Lesson |Feedback
Del.icio.us Del.icio.us | Digg! digg it
Learn how to invest like a pro with Morningstar’s Investment Workbooks (John Wiley & Sons, 2004, 2005), available at online bookstores.
Copyright 2015 Morningstar, Inc. All rights reserved. Please read our Privacy Policy.
If you have questions or comments please contact Morningstar.