The Securities and Exchange Commission (SEC) was created during the Great Depression to protect the interests of investors. Its 4,000 employees oversee nearly 12,000 investment counselors, 10,000 mutual funds and 4,500 brokerage firms. Many people think the SEC has not been very effective in doing its job of making rules, preventing fraud and maintaining fair and orderly markets. The SEC has been plagued by problems and mistakes such as conflict-of-interest questions in its general counsel’s office, and its record of almost never taking violators to court.

In defense of its record, the SEC says it annually reviews many thousands of financial statements and corporate disclosures each year. It claims its lawyers go up against corporations that spend more on lawyer’s fees than the SEC’s entire annual budget.
Critics claim the small penalties the SEC levies against companies are not an effective deterrent and that criminal convictions against the executives of these companies are extremely rare. They also say the often-close relationships this regulatory agency shares with the companies it regulates hinder effective enforcement.

Pending Legislation: S.837 - Stronger Enforcement of Civil Penalties Act of 2023
Sponsor: Sen. Jack Reed (RI)
Status: Senate Committee on Banking, Housing, and Urban Affairs
Chairperson: Sen. Sherrod Brown (OH)