How the SEC has played an important role in accounting standards - Essay Example

Due to this, the task of protecting investors assumes paramount importance for the government (Sec.gov). The primary concept influencing and controlling the securities industry in the United States is that every investor, whether an individual or institution, should be able to ‘recognize’ the investment properly. This involves having free access to the main features and conditions surrounding the investment, not only before investors spend money in it, but also as long as they continue to retain their money in it.

In compliance with this vital concept, the SEC makes it mandatory for public organizations to ‘disclose’ significant financial and other information about itself to the general public. Such disclosures form an accumulation of information that can be accessed by any investor while deciding to purchase, sell or retain a security (Sec.gov). The accumulation of information should be regularly updated with precise and timely inputs to facilitate sound investment decisions from the investing public.

The SEC makes sure this objective is achieved by interacting with all players in the securities industry such as private organizations, securities exchanges, securities brokers, securities dealers, investment counselors and mutual funds to ensure they disclose meaningful information, conduct dealings in a fair and proper manner and safeguard against fraud. Realizing that its stature and effectiveness should always be on the highest levels, the SEC makes maximum use of its enforcement authority.

The SEC feeds on many sources of information {the most significant being individual investors}, to instigate hundreds of legal cases each year against securities law infractions such as insider trading, supplying untrue or deluding information or fraudulent practices carried out by provide individuals or business organizations (Sec.gov). In addition to its primary role as guardian of the