United States securities regulation

Securities regulation in the United States is the field of U.S. law that covers transactions and other dealings with securities. The term is usually understood to include both federal and state-level regulation by governmental regulatory agencies, but sometimes may also encompass listing requirements of exchanges like the New York Stock Exchange and rules of self-regulatory organizations like the Financial Industry Regulatory Authority (FINRA).

On the federal level, the primary securities regulator is the Securities and Exchange Commission (SEC). Futures and some aspects of derivatives are regulated by the Commodity Futures Trading Commission (CFTC). Understanding and complying with security regulation helps businesses avoid litigation with the SEC, state security commissioners, and private parties. Failing to comply can even result in criminal liability.

Overview

The SEC was created by the Securities Exchange Act of 1934 to enforce the Securities Act of 1933. The SEC oversees several important organizations: for example, FINRA, a self-regulatory organization, is regulated by the SEC. FINRA promulgates rules that govern broker-dealers and certain other professionals in the securities industry. It was formed when the enforcement divisions of the National Association of Securities Dealers (NASD), FINRA, and the New York Stock Exchange merged into one organization. Similarly, the Securities Investor Protection Corporation (SIPC) is overseen by the SEC.

All brokers and dealers registered with the SEC under 15 U.S.C. § 78o, with some exceptions, are required to be members of SIPC (pursuant to 15 U.S.C. § 78ccc) and are subject to its regulations.