The SEC goal is to ensure that investors are protected, that capital formation is facilitated and that a fair, efficient and orderly market is maintained (SEC, 2018). The SEC does all this to ensure that investors are protected against unscrupulous dealings from agents or organizations. In order to ensure that its mission is upheld, the SEC distributes its functions among various divisions. This article will highlight the roles of one of its key divisions, which is the Division of Corporation Finance.
It is this division that deals with all matters pertaining to financial statements that companies release to the public. First SEC ensures that companies adhere to the regulations set in place regarding the initials stock offering and subsequent reporting of the statements (SEC, 2018). It is the work of this division to continuously review all statements disclosed by companies to ensure they are up to code and offer the firms assistances in case they require interpretation of the SEC rules.
It is imperative to first list the documents that SEC requires all firms to file. These statements include:
- Registration statements for newly offered securities
- Annual and quarterly filling (Forms 10-k and 10-Q)
- Proxy materials sent to shareholders before an annual meeting
- Annual reports to shareholders
- Documents concerning tender offers
- Filings related to mergers and acquisition
Source (SEC, 2018)
By asking for the above documents, the SEC ensure that all the operations and investment of a company are public knowledge. This way all an investor needs to do is his due diligence to acquire this information. Furthermore, SEC makes these statements publicly available so that any individual who has an interest in a company can easily access them (SEC, 2018). It is the duty of the staff in this division to guide and counsel any member of the public and applicants on how to undertake their activities in accordance with SEC rules. Such acts ensure that new applicants will always have the acquired information to maintain the integrity of the financial statements they will provide in the future.
Even though the SEC requires the information to be presented, some companies might provide altered or false statements. It is, therefore, the duty of the SEC to ensure the information provided by companies reflects the actual position of the company. In this regard, another division of the SEC ensures that the regulations set are adhered to. The Division of Enforcement is the one that deals with all the companies or individual who fail to execute the regulations to the latter (Columbia University, 1999).
The division of enforcement ensures that companies maintain the integrity of preparing financial statements through the fear of prosecutions. It is in this division that evidence against wrongdoers is gathered, analyzed and in the event that a wrong has been committed, a civil action is initiated in the federal court. It is important to note that investigations in this matter are usually done privately and SEC endeavors to develop the facts of the case full before proceeding further (Columbia University, 1999).
In conclusion, the SEC maintains the integrity of the financial statements by requiring that all companies file their 10-K and 10-Q forms. The company must also disclose all information relating to mergers, a proxy statement to shareholders, annual reports, and tender offers. In addition, the SEC has a whole that only deals with the enforcement of its rules and regulations. This division ensures that by following the set guidelines the integrity of the statements provided to the public are factual and transparent.
Columbia University. (1999). How the SEC Protects Investors and Maintains Market Intergity. Retrieved from Columbia University: http://www.columbia.edu/~hcs14/SEC.htm
SEC. (2018). What We Do. Retrieved from SEC: https://www.sec.gov/Article/whatwedo.html