Responsibilities

The SEC administers a number of the most important reform measures of the New Deal: the Securities Act of 1933, the Securities Exchange Act of 1934, the Public Utility Holding Company Act of 1935, the Trust Indenture Act of 1939, the Investment Company Act of 1940, and the Investment Advisers Act of 1940. In addition it may act as a participant in corporate reorganizations in the federal courts under the National Bankruptcy Act.

The first three of these statutes were passed in response to the pressure for greater protection of investors that developed as a result of the drastic decline in values of securities after Oct., 1929, the revelation of fraudulent and unfair practices in the sale of stocks and bonds, and the widespread belief that such practices had contributed to the severity of the Great Depression of the 1930s.

The Securities Act of 1933 is intended to compel full disclosure to investors of material facts about securities offered and sold in interstate commerce or through the mails. It requires that before an issue of securities may be offered for public sale the issuer must file with the SEC a registration statement giving complete information on such securities and on the issuing company. Dealers in securities must provide their customers with a condensation of the data in the statement. The SEC examines the statement and may refuse registration if it appears to be misleading, inaccurate, or incomplete. If registration is denied, the securities may not be offered for sale. However, an approval of the statement is not a finding by the SEC that the securities have investment value, or even a guarantee that the disclosures are accurate.

The Securities Exchange Act of 1934 is designed to increase the information available to investors and to prevent unfair practices in U.S. stock exchanges. It requires that certain current information be made public on the financial and managerial condition of corporations whose securities are traded in the exchanges. A registration statement containing such data for each listed security must be submitted to the SEC. The act also places the stock exchanges and over-the-counter markets under the SEC's supervision. Stock exchanges, brokers, and dealers must file information about themselves with the commission. Manipulative practices and false and misleading statements are prohibited. Other practices, such as short sales and market pegging, are regulated. Officers, directors, and principal stockholders of corporations whose securities are registered must report all their transactions in equity securities of their companies. The Board of Governors of the Federal Reserve System is responsible for regulating by means of margin requirements the use of bank credit to finance trading in securities.

The Public Utility Holding Company Act regulates the financial practices of holding-company systems controlling electric and gas utilities. It provides for registration of holding companies, elimination of uneconomic holding-company structures, and supervision of their transactions in securities and of certain of their financial practices. The SEC must pass upon all plans for reorganization of such companies or their subsidiaries and must require the corporate simplification and geographic integration of holding-company systems. However, it does not regulate public-utility rates. This act was upheld by the Supreme Court in 1946.

The Trust Indenture Act requires that securities of trustees meet satisfactory standards, and it also sets up qualifications for trustees. The Investment Company and Investment Advisers acts provide for registration and regulation of investment trusts, investment companies, and investment advisers.

The various laws administered by the SEC are intended to give investors a greater degree of safety in entrusting their money to enterprises than was previously afforded them. With these laws the emphasis in determining responsibility for the quality and condition of goods sold has shifted from the buyer to the seller. However, the statutes do not guarantee investors against loss. It is perhaps no more difficult for them to lose their money than before. The regulatory measures were at first bitterly opposed by the financial community, on the ground that they imposed such severe limitations and liabilities on security issuers and dealers as to impede the financing of industry. Persons aggrieved by the decisions of the SEC have a right of review by a U.S. circuit court of appeals. The original penalties of the Securities Act of 1933 were softened in 1934. Governmental supervision has won generally increasing acceptance by the interests concerned.

The ICC, the first regulatory commission in U.S. history, was established as a result of mounting public indignation in the 1880s against railroad malpractices and abuses (see Granger movement), but until President Theodore Roosevelt, the ICC's effectiveness was limited by the failure of Congress to give it enforcement power, by the Supreme Court's interpretation of its powers, and by the vague language of its enabling act. Beginning with the Hepburn Act (1906), the ICC's jurisdiction was gradually extended beyond railroads to all common carriers except airplanes by 1940. Its enforcement powers to set rates were also progressively extended, through statute and broadened Supreme Court interpretations of the commerce clause of the Constitution, as were its investigative powers for determining fair rates of return on which to base rates. In addition, the ICC was given the task of consolidating railroad systems and managing labor disputes in interstate transport. In the 1950s and 60s the ICC enforced U.S. Supreme Court rulings that required the desegregation of passenger terminal facilities.

The ICC's safety functions were transferred to the Dept. of Transportation when that department was created in 1966; the ICC retained its rate-making and regulatory functions. However, in consonance with the deregulatory movement, the ICC's powers over rates and routes in rails and trucking were curtailed in 1980 by the Staggers Rail Act and Motor Carriers Act. Most ICC control over interstate trucking was abandoned in 1994, and the agency was terminated at the end of 1995. Many of its remaining functions were transferred to the new National Surface Transportation Board.

Duties of the FTC

The duties of the FTC are, in general, to promote fair competition through the enforcement of certain antitrust laws; to prevent the dissemination of false and deceptive advertising of goods, drugs, curative devices, and cosmetics; and to investigate the workings of business and keep Congress and the public informed of the efficiency of such antitrust legislation as exists, as well as of practices and situations that may call for further legislation.

Enforcement

The commission's law-enforcement activities have to do with the prevention of unfair methods of competition and false advertising (in accordance with the Federal Trade Commission Act of 1914 and the Wheeler-Lea Act of 1938); with administration of provisions restricting tying and exclusive dealing contracts, acquisition of capital stock, interlocking directorates, and price discriminations (in accordance with the Clayton Antitrust Act of 1914 and the Robinson-Patman Act of 1936); and with administration of the Webb-Pomerene Act of 1918, which permits associations to engage in export trade without incurring the penalties of the Sherman Antitrust Act. In 1946 the FTC was given the right to cancel faulty trademarks. The FTC also enforces the provisions of the Truth in Lending Act of 1968 over creditors (e.g., finance companies, retailers, and nonfederal credit unions) not specifically regulated by another government agency. The act was designed to ensure that a potential borrower can obtain meaningful information about the actual cost of consumer credit.

To enforce antitrust legislation, the commission is empowered to issue cease-and-desist orders upon ascertaining to its satisfaction that the laws are being violated. These orders, to be effective, usually must have court sanction, and the commission must, therefore, in various instances prove its case in court. In deciding such cases the courts have interpreted and applied the phrase "unfair methods of competition." Many of the judicial decisions have frustrated the work of the commission in restricting the growth of monopoly and also, to some degree, the intent of the antitrust laws. Yet the commission has done much toward ridding the business world of vicious competitive practices.

The commission may undertake special investigations at the order of Congress, the President, or upon its own initiative. In its investigatory work, the commission was delegated the power to require information from any corporation in interstate commerce. Many companies, however, gave only partial access to their records, and others gave none. A decision by the Supreme Court declared that access to records of private business, except where substantial proof is submitted as to a specific breach of the law, is a violation of the Fourth Amendment. Despite the fact that the commission's investigatory power was thus greatly limited, it has made and published a notable series of investigations. After the checks rendered by the courts, the commission tended more and more to carry out its recommendations through trade-practice conferences, at which representatives of an industry might voluntarily adopt regulations to control competition in that industry.

In keeping with the objective of the founding treaties, the commission initiates EU policy on the economy in particular but, increasingly, also on environmental and foreign and security affairs. The legislation it drafts is subject to amendment by the European Parliament and to ratification by the Council of the European Union. It was under the presidency of Jacques Delors (1985-95) that the commission put forward the Single European Act (1987) and the Treaty of European Union (1992; also known as the Maastricht Treaty), both of which provided for a significant expansion of the EU's powers. In 1995, Jacques Santer of Belgium became president of the commission. The entire commission resigned in 1999 amid accusations of financial mismanagement, corruption, fraud, and nepotism, and a new set of commissioners, with Romano Prodi of Italy as president, was appointed later the same year. In 2004, José Manuel Barroso succeeded Prodi as president.

The activities of the AEC included the production of fissionable materials, the manufacture and testing of nuclear weapons, the development of nuclear reactors for military and civilian use, and research in biological, medical, physical, and engineering sciences. Although the bulk of the AEC's work was in the field of atomic weaponry, it was also involved in projects relating to the peaceful uses of atomic energy (e.g., the development of atomic power plants for the production of electricity). The AEC was dissolved in 1974 and its responsibilities transferred to the Energy Research and Development Administration (these functions are now under the Department of Energy) and the Nuclear Regulatory Commission.

(1963–64) Group appointed by Pres. Lyndon B. Johnson to investigate the circumstances surrounding John F. Kennedy's slaying and the shooting of his assassin, Lee Harvey Oswald. It was chaired by Earl Warren and included two U.S. senators, two U.S. congressmen, and two former public officials. After months of investigation, it reported that Kennedy was killed by Oswald's rifle shots from the Texas School Book Depository and that Oswald's murder by Jack Ruby two days later was not part of a conspiracy to assassinate Kennedy. Its findings were later questioned in a number of books and articles and in a special congressional committee report in 1979, though no conclusive contradictory evidence was found.

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U.S. regulatory commission established by Congress in 1934. Its purpose was to restore investor confidence by ending the misleading sales practices and stock manipulations that had led to the stock market's 1929 collapse (see Stock Market Crash of 1929). It also prohibited the purchase of stock shares without adequate funds to pay for them, initiated registration and supervision of securities markets and stockbrokers, established rules regarding proxies, and prohibited unfair use of nonpublic information in stock trading (see insider trading). It also required that companies offering securities make full public disclosure of all relevant information. The discovery of fraudulent accounting practices among several large U.S. corporations brought demands for greater SEC oversight in the early 21st century.

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U.S. independent regulatory agency that oversees the civilian use of nuclear energy. Established in 1974 to replace the Atomic Energy Commission, the NRC licenses the construction and operation of nuclear reactors and other facilities and the ownership and use of nuclear materials. It issues standards, rules, and regulations for the maintenance of licenses, and it regularly inspects nuclear facilities to ensure compliance with public health and safety, environmental quality, national security, and antitrust laws. The NRC also investigates nuclear accidents, conducts public hearings, and reviews power-plant operations. Its commissioners are appointed by the president of the U.S.

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(1887–1995) First regulatory agency established in the U.S. and a prototype for independent government regulatory bodies. An agency of the U.S. Department of Transportation, it was responsible for the economic regulation of interstate surface transportation, including railroads, trucking companies, and buslines. It certified carriers, regulated rates, oversaw mergers, and approved railroad construction. The ICC was dissolved in 1995.

Learn more about Interstate Commerce Commission (ICC) with a free trial on Britannica.com.