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  3. 3. GROUP A Moin Ali Baig (GL) 328 Badar Munir 331 Kamran Bangash 308 Nadeem Arif 332 3
  4. 4. TOPIC What is SEC ? Introduction to SEC Objective & purpose Devisions Rules & Regulations 4
  5. 5. WHAT IS SEC ?The Securities and Exchange CommissionInvestor protection is intended to enhance investors’ confidence in the capital markets. Confidence in any capital market, is perhaps the single most important requirement for its sustenance and growth.It is in this context that the SEC plays a vital role. 5
  6. 6. BACKGROUND OF SECURITIES REGULATIONModern securities regulation started from the United States of America (US) in 1933.The 1920s in the US, when there was the absence of the full disclosure principles, were a time of fraudulent market practices, contributing to the market crash of 1929. 6
  7. 7. BACKGROUND OF SECURITIES REGULATIONIn 1934 the US government passed the Securities Exchange Act of 1934 which established the Securities and Exchange Commission (SEC), U.S.AThe Act also provides for civil and criminal penalties for fraud or misrepresentation. 7
  8. 8. BACKGROUND OF SECURITIES REGULATIONIt also empowers SEC to register and regulate securities exchanges, over the counter trading, security brokers, and security dealers. 8
  9. 9. BACKGROUND OF SECURITIES REGULATIONSince the beginning of market regulation in the US, many countries have embraced the concept and have established institutions charged with capital markets regulation as SECP in PAKISTAN. 9
  10. 10. OBJECTIVES OF SECThe are three core objectives of securities regulation: Investor protection Ensuring that market are fair efficient and transparent The reduction of risk. 10
  11. 11. Investor Protection Protection against misleading, manipulative or fraudulent practices, including insider trading, and the misuse of client assets Full disclosure of information which is material to investors’ decisions . Only duly licensed or authorized persons should be permitted to hold themselves out to the public as market operators Supervision of market participants 11
  12. 12. Ensuring that markets are fair, efficient and transparent The regulator’s approval of exchange and trading system operators and of trading rules helps to ensure fair markets. Dissemination of relevant information is timely and widespread and is reflected in the price formation process Information about trading in the market is made publicly available on a real-time basis 12
  13. 13. The reduction of systemic risk Reduce the risk of failure (through measures including capital and internal control requirements) Respond to market disruptions through facilitation of stable domestic and global cooperation and information sharing. Ensure that capital and other prudential requirements are sufficient to address appropriate risk taking. 13
  14. 14. RESPONSIBILITY OF THE COMMISSION Interpret federal securities laws; Issue new rules and amend existing rules; Oversee the inspection of securities firms, brokers, investment advisers, and ratings agencies; Oversee private regulatory organizations in the securities, accounting, and auditing fields; and Coordinate securities regulation with federal, state, and foreign authorities. 14
  15. 15. Divisions Division of Corporation Finance Division of Trading and Markets Division of Investment Management Division of Enforcement Division of Risk, Strategy, and Financial Innovation 15
  16. 16. Division of Corporation FinanceThe Division of Corporation Finance seeks to ensure that investors are provided with material information in order to make informed investment decisions, both when a company initially offers its securities to the public and on an ongoing basis as it continues to give information to the marketplace. 16
  17. 17. Division of Corporation FinanceThe Division of Corporation Finance reviews documents that publicly-held companies are required to file with the Commission. The documents include: Registration statements for newly- offered securities; Annual and quarterly filings 17
  18. 18. Division of Corporation Finance Proxy materials sent to shareholders before an annual meeting; Annual reports to shareholders; Documents concerning tender offers (a tender offer is an offer to buy a large number of shares of a corporation, usually at a premium above the current market price) and Filings related to mergers and acquisitions. 18
  19. 19. Division of Trading and MarketsThe Division regulates the major securities market participants, including broker-dealers, self- regulatory organizations (such as stock exchanges and clearing agencies),The Division of Trading and Markets assists the Commission in executing its responsibility for maintaining fair, orderly, and efficient markets. 19
  20. 20. Division of Investment ManagementThe Division of Investment Management regulates investment companies (such as mutual funds, closed-end funds, UITs, ETFs, and interval funds), including variable insurance products, and federally registered investment advisers.
  21. 21. Division of EnforcementThe Division of Enforcement investigates possible violations of securities laws, recommends Commission action when appropriate, either in a federal court or before an administrative law judge, and negotiates settlements. 21
  22. 22. Division of EnforcementCommon conduct that may lead to SEC investigations include: Misrepresentation or omission of important information Manipulating the market prices of securities; Stealing customers funds or securities; Violating broker-dealers responsibility to treat customers fairly; Insider trading and Selling unregistered securities. 22
  23. 23. Division of Risk, Strategy, and Financial InnovationThe Divisions responsibilities cover three broad areas: Risk and economic analysis Strategic research Financial innovation 23
  24. 24. RULES & REGULATIONS The securities act of 1933 The securities act of 1934 SEC The Maloney act of 1936 NASDAQ NASD 24
  25. 25. RULES & REGULATIONS The investment company act of 1940 The investment advisor act of 1940 The security investor protection act1970 SPIC 25
  26. 26. RULES & REGULATIONS The securities act of amendments 1975 Circuit breakers & trading curbs 26
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