This Day in the Law
June 6

President Franklin Roosevelt Creates U.S. Securities and Exchange Commission (1934)

On June 6, President Franklin D. Roosevelt signed the Securities Exchange Act of 1934 into law and created the U.S. Securities and Exchange Commission (SEC).

The Securities Exchange Act of 1934, 48 Stat. 881, codified at 15 U.S.C. § 78a et seq., was a sweeping piece of legislation. President Roosevelt passed the Act as part of his New Deal to govern securities (e.g. stocks and bonds) transactions on the secondary market (after issue).

The Act required registration of securities listed on public stock exchanges, certain types of disclosures, regulated brokers’ transactions, and set forth many other requirements. The Act also created the U.S. Securities and Exchange Commission (SEC) to enforce the provisions in the Act. President Roosevelt appointed Joseph Kennedy – the father of John F. Kennedy – as the first chairman of the SEC.

The Act came shortly after the 1933 Securities Exchange Act which was the very first major piece of federal legislation to regulate securities. Prior to the 1933 and 1934 Acts, regulation of securities was chiefly governed by state laws – commonly called blue sky laws.

Today, the SEC is an independent federal agency that enforces the Securities Exchange Acts of 1933 and 1934 and other such acts as the Sarbanes-Oxley Act of 2002.

According to the SEC, its mission is to “protect investors, maintain fair, orderly, and efficient markets, and facilitate capital formation.” The SEC requires that all investors should have access to the basic facts about an investment prior to buying. As such, the SEC acts to create a common pool of reliable and timely information for investors to maintain fair dealings between them.