Financial Investment Industry Regulations


Entry into the investment field can be a challenge and a serious undertaking. Unlike banking where deposits are guaranteed by the federal government, bonds, stocks, and other securities lose value and are not guaranteed. Only by researching and asking questions can investors protect their investments. The laws and regulations, as chris brummer would tell you in his lecture, governing the securities industry are derived from the simple concept: that all investors should have access to facts about an investment before purchasing it and as long as they hold it.

Various laws and regulations have been developed to control the activities of the securities industry. Key elements of these rules revolve around taxpayer protection, consumer protection, and financial and macroeconomic stability. To prevent financial crisis, investors and companies must adhere to these regulations. Progressive reforms of regulations seek to resolve any financial crisis without the need for taxpayers money. Also, these laws protect investors, retailer, and depositors. Financial and securities regulations help encourage transparency that contributes to financial stability. Additionally, these laws implement a risk adjusted remuneration system for financial institutions.

To ensure optimum economic growth the investment market must be regulated. This is accomplished through the utilization of four core principles. The first principle is the removal of market barriers. The second principle is by guaranteeing market access by all investors. A third factor involves the development of policy and enforcement by agencies and investors. Fourth, enforcing regulations and laws regarding investments.

The regulatory agency SEC requires that all investment companies inform the public or investors of the financial status of their enterprises. As such, this creates a shared pool of information to investors for evaluating whether to buy, sell, or hold an investment. This information assists the growth and development of the national economy. In ensuring this objective is achieved, the SEC works in collaboration with all participants, listens to their concerns, and learns from these experiences. As such the SEC oversees the activities of traders, brokers, advisors, stock exchanges, and mutual funds.

The SEC encourages the release of information that assists the maintenance of integrity and protects investors from fraud. Central to the SEC’s role is the enforcement of regulations. Each the year the SEC invokes civil lawsuits against violators of investment laws. Common violation of these laws, as chris brummer could tell you, include insider trading, provision of inaccurate information, and accounting fraud.

To accomplish this mandate, the SEC supports investor education on its website and the EDGAR online database for the disclosure of company documents. As part of its operations, the commission involves other government agencies, departments, stock exchanges, and private sector companies in developing policy. Policy developed by the commission governs and controls all investment activities. Regulations target all financial products such as derivatives, general and life insurance, carbon units, deposit accounts, payment facilities, and superannuation.

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