Division of Trading and Markets
The Division of Trading and Markets assists the Commission in executing its responsibility for maintaining fair, orderly, and efficient markets. The staff of the Division provide day-to-day oversight of the major securities market participants: the securities exchanges; securities firms; self-regulatory organizations (SROs) including the Financial Industry Regulatory Authority (FInRA), the Municipal Securities Rulemaking Board (MSRB), clearing agencies that help facilitate trade settlement; transfer agents (parties that maintain records of securities owners); securities information processors; and credit rating agencies.
The Division also oversees the Securities Investor Protection Corporation (SIPC), which is a private, non-profit corporation that insures the securities and cash in the customer accounts of member brokerage firms against the failure of those firms. It is important to remember that SIPC insurance does not cover investor losses arising from market declines or fraud.
The Division's additional responsibilities include:
carrying out the Commission's financial integrity program for broker-dealers;
reviewing (and in some cases approving, under authority delegated from the Commission) proposed new rules and proposed changes to existing rules filed by the SROs;
assisting the Commission in establishing rules and issuing interpretations on matters affecting the operation of the securities markets; and
surveilling the markets.
Division of Investment Management
The Division of Investment Management assists the Commission in executing its responsibility for investor protection and for promoting capital formation through oversight and regulation of America's $66.8 trillion investment management industry. This important part of the U.S. capital markets includes mutual funds and the professional fund managers who advise them; analysts who research individual assets and asset classes; and investment advisers to individual customers. Because of the high concentration of individual investors in the mutual funds, exchange-traded funds, and other investments that fall within the Division's purview, the Division of Investment Management is focused on ensuring that disclosures about these investments are useful to retail customers, and that the regulatory costs which consumers must bear are not excessive.
The Division's additional responsibilities include:
assisting the Commission in interpreting laws and regulations for the public and SEC inspection and enforcement staff;
responding to no-action requests and requests for exemptive relief;
reviewing investment company and investment adviser filings;
assisting the Commission in enforcement matters involving investment companies and advisers; and
advising the Commission on adapting SEC rules to new circumstances.
Division of Enforcement
The Division of Enforcement assists the Commission in executing its law enforcement function by recommending the commencement of investigations of securities law violations, by recommending that the Commission bring civil actions in federal court or as administrative proceedings before an administrative law judge, and by prosecuting these cases on behalf of the Commission. As an adjunct to the SEC's civil enforcement authority, the Division works closely with law enforcement agencies in the U.S. and around the world to bring criminal cases when appropriate.
The Division obtains evidence of possible violations of the securities laws from many sources, including market surveillance activities, investor tips and complaints, other Divisions and Offices of the SEC, the self-regulatory organizations and other securities industry sources, and media reports.
All SEC investigations are conducted privately. Facts are developed to the fullest extent possible through informal inquiry, interviewing witnesses, examining brokerage records, reviewing trading data, and other methods. With a formal order of investigation, the Division's staff may compel witnesses by subpoena to testify and produce books, records, and other relevant documents. Following an investigation, SEC staff present their findings to the Commission for its review. The Commission can authorize the staff to file a case in federal court or bring an administrative action. In many cases, the Commission and the party charged decide to settle a matter without trial.
Common conduct that may lead to SEC investigations include:
misrepresentation or omission of important information about securities;
manipulating the market prices of securities;
stealing customers' funds or securities;
violating broker-dealers' responsibility to treat customers fairly;
insider trading (violating a trust relationship by trading while in possession of material, non-public information about a security); and
selling unregistered securities.
Whether the Commission decides to bring a case in federal court or within the SEC before an administrative law judge may depend upon the type of sanction or relief that is being sought. For example, the Commission may bar someone from the brokerage industry in an administrative proceeding, but an order barring someone from acting as a corporate officer or director must be obtained in federal court. Often, when the misconduct warrants it, the Commission will bring both proceedings.
Civil action: The Commission files a complaint with a U.S. District Court and asks the court for a sanction or remedy. Often the Commission asks for a court order, called an injunction, that prohibits any further acts or practices that violate the law or Commission rules. An injunction can also require audits, accounting for frauds, or special supervisory arrangements. In addition, the SEC can seek civil monetary penalties, or the return of illegal profits (called disgorgement). The court may also bar or suspend an individual from serving as a corporate officer or director. A person who violates the court's order may be found in contempt and be subject to additional fines or imprisonment.
Administrative action: The Commission can seek a variety of sanctions through the administrative proceeding process. Administrative proceedings differ from civil court actions in that they are heard by an administrative law judge (ALJ), who is independent of the Commission. The administrative law judge presides over a hearing and considers the evidence presented by the Division staff, as well as any evidence submitted by the subject of the proceeding. Following the hearing the ALJ issues an initial decision that includes findings of fact and legal conclusions. The initial decision also contains a recommended sanction. Both the Division staff and the defendant may appeal all or any portion of the initial decision to the Commission. The Commission may affirm the decision of the ALJ, reverse the decision, or remand it for additional hearings. Administrative sanctions include cease and desist orders, suspension or revocation of broker-dealer and investment advisor registrations, censures, bars from association with the securities industry, civil monetary penalties, and disgorgement.
Division of Economic and Risk Analysis
The Division of Economic and Risk Analysis assists the Commission in executing its mission to protect investors, maintain fair, orderly, and efficient markets, and facilitate capital formation by integrating robust economic analysis and rigorous data analytics into the work of the SEC. The Division has a broad role in Commission activities, interacting with nearly every Division and Office, providing sophisticated and data-driven economic and risk analyses to help inform the agency's policymaking, rulemaking, enforcement, and examinations.
There are two main functions for the Division. First, DERA staff provide vital support in the form of economic analyses in support of Commission rulemaking and policy development. Second, the Division also provides economic analysis and research, risk assessment, and data analytics to critically support the agency's resources on matters presenting the greatest perceived risks in litigation, examinations, and registrant reviews, as well as providing economic support for enforcement matters.
Among the functions performed by the Division are:
Analyzing the potential economic effects of Commission rulemakings or other Commission actions. In this role, offices within DERA works closely with the other Divisions and Offices to help examine the need for regulatory action, analyze the potential economic effects of rules and other Commission actions, develop data-driven analyses of market activity, and assist in evaluating public comments and studies.
Providing quantitative and qualitative research and support related to risk assessment. DERA staff help the Commission to anticipate, identify, and manage risks, focusing on early identification of potential fraud and illegal or questionable activities. Staff collects, analyzes, and disseminates information to the Commission and its Staff about regulated entities and market activity.
Assisting the Division of Enforcement by, for example, providing economic and quantitative analysis and support in enforcement proceedings and settlement negotiations.
Offices
Office of the General Counsel
The General Counsel is appointed by the Chairman as the chief legal officer of the Commission, with overall responsibility for the establishment of agency policy on legal matters. The General Counsel serves as the chief legal advisor to the Chairman regarding all legal matters and services performed within, or involving, the agency, and provides legal advice to the Commissioners, the Divisions, the Offices, and other SEC components as appropriate.
The General Counsel represents the SEC in civil, private, or appellate proceedings as appropriate, including appeals from the decisions of the federal district courts or the Commission in enforcement matters, and appeals from the denial of requests under the Freedom of Information Act. Through its amicus curiae program, the General Counsel often intervenes in private appellate litigation involving novel or important interpretations of the securities laws, and the Office is responsible for coordinating with the Department of Justice in the preparation of briefs on behalf of the United States involving matters in which the SEC has an interest.
The General Counsel is also responsible for determining the adherence by attorneys in the SEC to appropriate professional standards, as well as for providing advice on standards of conduct to Commissioners and staff, as appropriate. It is responsible for the final drafting of all proposed legislation that the Chairman or the Commission choose to submit for consideration to the Congress or the states, and for coordinating the SEC staff positions on such legislation.
Office of the Chief Accountant
The Chief Accountant is appointed by the Chairman to be the principal adviser to the Commission on accounting and auditing matters. The Office of the Chief Accountant assists the Commission in executing its responsibility under the securities laws to establish accounting principles, and for overseeing the private sector standards-setting process. The Office works closely with the Financial Accounting Standards Board, whose accounting standards the Commission has recognized as generally accepted for purposes of the federal securities laws, as well as the International Accounting Standards Board and the American Institute of Certified Public Accountants.
In addition to its responsibility for accounting standards, the Commission is responsible for the approval or disapproval of auditing rules put forward by the Public Company Accounting Oversight Board, a private-sector regulator established by the Sarbanes-Oxley Act to oversee the auditing profession. The Commission also has thorough-going oversight responsibility for all of the activities of the PCAOB, including approval of its annual budget. To assist the Commission in the execution of these responsibilities, the Office of the Chief Accountant is the principal liaison with the PCAOB. The Office also consults with registrants and auditors on a regular basis regarding the application of accounting and auditing standards and financial disclosure requirements.
Because of its expertise and ongoing involvement with questions concerning the financial books and records of public companies registered with the SEC, the Office of the Chief Accountant is often called upon to assist in addressing issues that arise in the context of Commission enforcement actions.
Office of Compliance Inspections and Examinations
The Office of Compliance Inspections and Examinations administers the SEC's nationwide examination and inspection program for registered self-regulatory organizations, broker-dealers, transfer agents, clearing agencies, investment companies, and investment advisers. The Office conducts inspections to foster compliance with the securities laws, to detect violations of the law, and to keep the Commission informed of developments in the regulated community. Among the more important goals of the examination program is the quick and informal correction of compliance problems. When the Office finds deficiencies, it issues a "deficiency letter" identifying the problems that need to be rectified and monitor the situation until compliance is achieved. Violations that appear too serious for informal correction are referred to the Division of Enforcement.
Office of Credit Ratings
In July 2010, Congress passed the Dodd-Frank Wall Street Reform and Consumer Protection Act ("Dodd-Frank Act"), which amended Section 15E of the Securities Exchange Act of 1934 to enhance the regulation, accountability, and transparency of nationally recognized statistical rating organizations or "NRSROs."
The Dodd-Frank Act mandated the creation of the Office of Credit Ratings (“OCR”) in support of the Commission’s mission to protect investors, facilitate capital formation, and maintain fair, orderly and efficient markets. OCR was established in June 2012 with the appointment of its Director, Thomas J. Butler.
The Office is charged with administering the rules of the Commission with respect to the practices of NRSROs in determining credit ratings for the protection of users of credit ratings and in the public interest; promoting accuracy in credit ratings issued by NRSROs; and working to ensure that credit ratings are not unduly influenced by conflicts of interest and that NRSROs provide greater transparency and disclosure to investors.
In support of this mission, OCR conducts examinations of NRSROs to assess and promote compliance with statutory and Commission requirements; monitors the activities of NRSROs, conducts outreach with investors, issuers, and other industry participants; develops and administers rules affecting NRSROs; and provides guidance generally with respect to the Commission’s regulatory initiatives related to NRSROs. OCR also liaises with domestic and foreign regulators on credit rating agency initiatives to facilitate regulatory cohesion and enhance the Commission’s role in the global regulatory environment.
The Office is located in New York and Washington, D.C. and is staffed with individuals including examiners, attorneys and accountants with expertise in, among other areas, structured finance, corporate finance, municipal finance, financial institutions, insurance companies, and credit rating agencies.
Office of International Affairs
The SEC works extensively in the international arena to promote cooperation among national securities regulatory agencies, and to encourage the maintenance of high regulatory standards worldwide. The Office of International Affairs assists the Chairman and the Commission in the development and implementation of the SEC's international regulatory and enforcement initiatives. The Office negotiates bilateral and multilateral agreements for Commission approval on such subjects as regulatory cooperation and enforcement assistance, and oversees the implementation of such arrangements. It is also responsible for advancing the Commission's agenda in international meetings and organizations. The Office also conducts a technical assistance program for countries with emerging securities markets, which includes training both in the United States and in the requesting country. Over 100 countries currently participate in this program.
Office of Investor Education and Advocacy
The Office of Investor Education and Advocacy has three main functional areas:
The Office of Investor Assistance responds to questions, complaints, and suggestions from the members of the public. Tens of thousands of investors contact the SEC each year using the agency's online forms or our (800) SEC-0330 hotline (toll-free in U.S.) to ask questions on a wide range of securities-related topics, to complain about problems with their investments or their financial professionals, or to suggest improvements to the agency's regulations and procedures.
The Office of Investor Education carries out the SEC's investor education program, which includes producing and distributing educational materials, participating in educational seminars and investor-oriented events, and partnering with federal agencies, state regulators, and others on investor literacy initiatives.
The Office of the Chief Counsel creates public-facing content on securities-related topics (including for Investor.gov, the SEC's website designed for individual investors) and provides advice to OIEA on securities and administrative law issues.
Office of Municipal Securities
The Office of Municipal Securities coordinates the SEC's municipal securities activities, administers SEC rules relating to the municipal securities market, advises the Commission on policy matters relating to the municipal bond market, and provides technical assistance in the development and implementation of major SEC initiatives in the municipal securities area.
Office of Ethics Counsel
The Office of the Ethics Counsel is responsible for advising and counseling all Commission employees and members on such issues as personal and financial conflicts of interest, securities holdings and transactions of Commission employees and their immediate families, gifts, seeking and negotiating other employment, outside activities, financial disclosure, and post-employment restrictions.
Office of the Investor Advocate
The Office of Investor Advocate has four core functions, to provide a voice for investors to ensure their needs are considered in SEC decision-making, to assist retail investors, to study investor behavior and to support the SEC’s Investor Advisory Committee.
Office of Women and Minority Inclusion
The Office of Minority and Women Inclusion (OMWI) is responsible for all matters related to diversity in management, employment and business activities at the SEC. OMWI is committed to ensuring that diversity and inclusion are leveraged throughout the agency to advance the SEC's mission to protect investors, maintain fair, orderly, and efficient markets, and facilitate capital formation.
Office of the Chief Operating Officer
The Office of the Chief Operating Officer assists the Chairman in developing and executing the management policies of the SEC. The Office formulates budget and authorization strategies, supervises the allocation and use of SEC resources, promotes management controls and financial integrity, manages the administrative support offices, and oversees the development and implementation of the SEC's automated information systems. The Office has six main functional areas:
The Office of Acquisitions develops and executes programs for the SEC's acquisitions policy, procurement and contract administration, acquisitions workforce training and certification, and government purchase card.
The Office of Financial Management administers the financial management and budget functions of the SEC. The Office assists the Chairman and the Executive Director in formulating budget and authorization requests, monitors the utilization of agency resources, and develops, oversees, and maintains SEC financial systems. These activities include cash management, accounting, fee collections, travel policy development, and oversight and budget justification and execution.
The Office of Support Operations assists the Chairman and the Executive Director in managing the agency's facilities and assets, and provides a wide range of support services to the SEC staff. The Office serves the Headquarters Office and all Regional Office locations on matters including property management, office lease acquisition and administration, space renovation, supplies and office equipment management, transportation, mail distribution, publications, printing, and desktop publishing. Also, OSO is responsible for the processing of requests under the Freedom of Information and Privacy Acts, the management of all agency records in accordance with the Federal Records Act, and maintaining the security and safety of all SEC facilities.
The Office of Human Resources assists the Chairman in recruiting and retaining the best and the brightest professional staff in the federal workforce, and in ensuring that the SEC remains the employer of choice within the federal government. The Office has overall responsibility for the strategic management of the SEC's human capital. In addition, it is responsible for ensuring compliance with all federal regulations for the following areas: recruitment, staffing, retention, and separation; position management and classification; compensation and benefits counseling and processing; leadership and employee development; performance management and awards; employee relations; labor relations; the SEC's disability, work/life, and telework programs; employee records processing and maintenance; and employee financial disclosure. The Office also represents the Commission as the liaison to the U.S. Office of Personnel Management and other Federal Government agencies, various public and private-sector professional human resources organizations, and educational institutions in matters relating to human capital management.
The Office of Strategic Initiatives provides direct executive-level oversight for the ongoing transformation of specific functions and programs, including information services, and the EDGAR redesign program.
The Office of Information Technology supports the Commission and staff of the SEC in all aspects of information technology. The Office has overall management responsibility for the Commission's IT program including application development, infrastructure operations and engineering, user support, IT program management, capital planning, security, and enterprise architecture. The Office operates the Electronic Data Gathering Analysis and Retrieval (EDGAR) system, which electronically receives, processes, and disseminates more than 500,000 financial statements every year. The Office also maintains a very active website that contains a wealth of information about the Commission and the securities industry, and also hosts the EDGAR database for free public access.
Office of Legislative and Intergovernmental Affairs
The Office of Legislative Affairs and Intergovernmental Affairs serves as the agency's formal liaison with the Congress, other Executive Branch agencies, and state and local governments. The staff carefully monitor ongoing legislative activities and initiatives on Capitol Hill that affect the Commission and its mission. Through regular communication and consultation with House and Senate members and staff, the Office communicates legislators' goals to the agency, and communicates the agency's own regulatory and management initiatives to the Congress.
The Office is responsible for responding to congressional requests for testimony of SEC officials, as well as requests for documents, technical assistance, and other information. In addition, the Office monitors legislative and oversight hearings that pertain to the securities markets and the protection of investors, even when an SEC witness is not present.
Office of Public Affairs
The Office of Public Affairs (OPA) assists the Commission in making the work of the SEC open to the public, understandable to investors and accountable to taxpayers. The Office helps every other SEC division and office accomplish the agency's mission – to protect investors, maintain fair, orderly, and efficient markets, and facilitate capital formation. OPA's principal activity is to communicate the agency's work and deliver the agency's data and other digital information to the public, market participants and other stakeholders on SEC.gov. In addition to managing SEC.gov and other digital media platforms, the Office administers internal and external communications programs.
Office of the Secretary
The Secretary of the Commission is appointed by the Chairman, and is responsible for the procedural administration of Commission meetings, rulemaking, practice, and procedure. Among the responsibilities of the Office are the scheduling and recording of public and non-public meetings of the Commission; the administration of the process by which the Commission takes action without a meeting (called the seriatim process); the administration of the duty-officer process (by which a single Commissioner is designated to authorize emergency action); the maintenance of records of Commission actions; and the maintenance of records of financial judgments in enforcement proceedings. The Office also provides advice to the Commission and the staff on questions of practice and procedure.
The Office reviews all SEC documents submitted by the staff to the Commission. These include rulemaking releases, SEC enforcement orders and litigation releases, SRO rulemaking notices and orders, and actions taken by SEC staff pursuant to delegated authority. In addition, it receives and tracks documents filed in administrative proceedings, requests for confidential treatment, and comment letters on rule proposals. The Office is responsible for publishing official documents and releases of Commission actions in the Federal Register and the SEC Docket, and it posts them on the SEC Internet website, www.sec.gov. The Office also monitors compliance with the Government in the Sunshine Act.
Office of Equal Employment Opportunity
Because the SEC's employees are its most important resource, the Office of Equal Employment Opportunity works to ensure that the agency's professional staff come from diverse backgrounds that reflect the diversity of the investing public. Equal employment opportunity at the SEC is a continuing commitment. To maintain neutrality in resolving disputes, the EEO Office is independent of any other SEC office. The EEO Director reports to the Chairman. The primary mission of the EEO Office is to prevent employment discrimination, including discriminatory harassment, so that all SEC employees have the working environment to support them in their efforts to protect investors, maintain healthy markets, and promote capital formation.
Office of the Inspector General
The Office of the Inspector General conducts internal audits and investigations of SEC programs and operations. Through these audits and investigations, the Inspector General seeks to identify and mitigate operational risks, enhance government integrity, and improve the efficiency and effectiveness of SEC programs.
Office of Administrative Law Judges
The Commission's Office of Administrative Law Judges consists of independent judicial officers who conduct hearings and rule on allegations of securities law violations in cases initiated by the Commission. When the Commission initiates a public administrative proceeding, it refers the cases to the Office, where it is assigned to an individual Administrative Law Judge (ALJ). The ALJ then conducts a public hearing that is similar to a non-jury trial in the federal courts. Just as a federal judge can do, an ALJ issues subpoenas, rules on motions, and rules on the admissibility of evidence. At the conclusion of the hearing, the parties submit proposed findings of fact and conclusions of law. The ALJ prepares an initial decision that includes factual findings and legal conclusions that are matters of public record. Parties may appeal an initial decision to the Commission, which can affirm, reverse, modify, set aside or remand for further proceedings. Appeals from Commission action are to a United States Court of Appeals.