II' Market Regulation

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II. Market Regulation

• The Role of the SEC

• Four Divisions
• Division of Corporate Finance oversees
  corporate filings
• Division of Market Regulation oversees
  exchanges and broker dealers
• Division of Investment Management regulates
  investment advisors and mutual funds
• Division of Enforcement investigates wrongdoing
  and recommends action

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II. Market Regulation Cont.

• Two Types of Actions
• Civil actions lawsuits in District Courts
• Administrative actions penalties decided by an
  administrative law judge

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II. Market Regulation Cont.

• SEC Rulemaking
• Expands the language of laws to provide specific
  guidance for legal requirements
• Concept Release description of ideas to address
  an issue prior to formulating a Proposed Rule
• Proposed Rule draft regulations presented to
  the SEC for review, then public comment, then
  final review

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II. Market Regulation Cont.

• Required Disclosures Requires information to be
  made available to allow complete evaluation for
  investment decisions
• New publicly traded securities must be registered
  with the SEC, and initial investors provided with
  a prospectus with detailed information about the
  company and the security being offered
• 10-K annual report prepared by a qualified
  auditor
• 10-Q unaudited required quarterly report

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II. Market Regulation Cont.

• Self Regulation
• Allows groups of organizations involved in the
  securities markets to create their own rules and
  regulations
• Often requires separation of the oversight
  organization from the businesses that rely upon
  oversight
• Business maintain there own compliance
  departments to ensure meeting regulatory
  prescriptions
• Nationally recognized Statistical Rating
  Organization (NSRO) entities recognized by the
  SEC as competent to issued publicly available
  credit ratings
• Nationally recognized Statistical Rating
  Organization (NSRO) entities recognized by the
  SEC as competent to issued publicly available
  credit ratings

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III. Global Capital Markets

• Two broad categories Developed and Emerging
• Developed Markets highly regulated with
  efficient systems to match seekers and providers
  of capital, and with an active secondary market
• Emerging Markets smaller, with less liquidity
  (fewer buyers and sellers), greater volatility,
  less efficient trading mechanisms, more subject
  to political influences