US Securities and Exchange Commission (SEC) Brokers 2023
This guide ranks the top brokers regulated by the US Securities and Exchange Commission (SEC), a federal government agency responsible for protecting investors within the securities markets. We investigate the agency’s powers and regulations, track record and how brokers are supervised. Our team also explain how to carry out a company search and a regulations check.
Best SEC Brokers
The SEC enforces regulations and oversees firms to protect US retail traders. These are the top brokers authorized by the SEC:
#1 - eToro USA
eToro is a social investing platform that offers stocks, ETFs, options, and crypto. The broker is well-known for its user-friendly community-centred platform and competitive fees. With FINRA and SIPC oversight and millions of users across the world, this brand is highly respected. eToro securities trading is offered by eToro USA Securities, Inc.
"eToro is a top pick for users looking for social investing and copy trading. With a low deposit, zero commissions and an intuitive platform, the broker will meet the needs of newer traders."
- DayTrading Review Team
- Instruments: Stocks, Options, ETFs, Crypto
- Regulator: SEC, FINRA
- Platforms: Own
- Min. Deposit: $10
- Min. Trade: $10
Stocks Trading
Trade popular US stocks and ETFs with zero commissions while fractional shares and options are also available. The eToro Academy and excellent market research are also huge bonuses for newer investors.
Crypto Trading
eToro US leads the way in cryptocurrency trading. 1% fee for buying or selling crypto added to the spread (from 0.75% for BTC), with their own wallet service and the largest number of cryptos to trade in the market. eToro copy trading is only for cryptos. Crypto asset investing is highly volatile and unregulated. No consumer protection. Tax on profits may apply.
Pros
- The online broker offers an intuitive social investment network with straightforward copy trading on cryptos
- eToro USA Securities is a trustworthy, SEC-regulated broker that is a member of FINRA and SIPC
- The $10 minimum deposit and straightforward account opening process means beginners can get started quickly
Cons
- Narrower range of instruments than some competitors
- No MetaTrader 4 platform integration
#2 - Webull
Webull is a US-regulated trading app that offers stocks, options, forex, cryptos, ETFs, fractional shares and more. The firm is authorized by the SEC and FINRA with a strong trust rating. Low fees, no minimum investment and generous bonuses have made the discount broker popular with online investors.
"Webull is best for traders looking to buy and sell stocks on a user-friendly app with zero commissions."
- DayTrading Review Team
- Instruments: Stocks, ETFs, options, cryptos, forex, ADRs, fractional shares, OTCs
- Regulator: SEC, FINRA
- Platforms: Own
- Min. Deposit: $0
- Min. Trade: 0.01 Lots
- Leverage: 1:4
Forex Trading
Webull offers a modest collection of 17 currencies, including majors like EUR/USD. Forex can be traded on the feature-rich investing app with real-time quotes and low spreads.
Stocks Trading
Webull offers a fantastic list of 2000+ US stocks, fractional shares, options, ETFs, OTC, and ADRs. There is no commission on stocks, ETFs, and options. Full extended trading hours is available while custom screeners and watchlists aid the decision making process.
Crypto Trading
Webull offers trading on popular cryptos like Bitcoin against the US Dollar. With 35+ tokens and premium analysis tools, traders can review market trends and identify opportunities in a few taps.
Pros
- Fractional shares
- Promotions with free stocks
- Smart Advisor for auto investing
Cons
- High deposit and withdrawal wire fees for non-US residents
- Sometimes sudden changes in trading conditions
- Day trading is limited for customers with less than $25,000 deposited
#3 - Moomoo
Moomoo is an SEC-regulated app-based investment platform that offers a straightforward and affordable way to invest in Chinese, Hong Kong and US stocks, ETFs and other assets. Margin trading is available and the brand accepts low minimum deposits while also decent several bonuses.
"Moomoo will appeal to stock traders who want to build an investment portfolio through a user-friendly app with low to zero commissions."
- DayTrading Review Team
- Instruments: Stocks, Options, ETFs, ADRs, OTCs
- Regulator: SEC, FINRA, MAS
- Platforms: Own
- Min. Deposit: $0
- Min. Trade: $0
Stocks Trading
Moomoo offers online US and Hong Kong stocks, and China-A shares trading across options, ETFs, ADRs, OTC, plus IPOs on a proprietary trading platform. The zero commissions, no account minimum and free level 2 data are standout features.
Pros
- Great mobile app for beginners
- Access to full extended pre-market trading hours
- ‘Moomoo Token’ transaction security
Cons
- No phone or live chat support
- High margin rate fees
- Aimed mainly towards US residents
#4 - M1 Finance
M1 Finance is a US brokerage that allows users to build a customizable investment portfolio from a range of 6000+ stocks and shares, ETFs and cryptocurrencies. The innovative 'pie' based portfolio management system allows traders to build several portfolios with different aims, and the brokerage supports machine-learning tools that can provide automated portfolio management.
"US investors who want a straightforward, commission-free way to invest in stocks and crypto with AI-powered strategy support should consider M1 Finance."
- DayTrading Review Team
- Instruments: Stocks, ETFs, OTC stocks
- Regulator: SEC, FINRA
- Platforms: Own
- Min. Deposit: $100
- Min. Trade: $1
Stocks Trading
M1 Finance offers a very large list of 6000+ stocks and shares listed on the NASDAQ and NYSE, as well as a small list of OTC securities. The shares are directly bought, sold and owned, meaning traders will have voting rights and benefit from dividends as well as capital gains. Commission-free trades and fractional shares will appeal to beginners and those on a budget.
Crypto Trading
M1 Finance users can open a crypto account to invest in 10 cryptocurrencies including Bitcoin, Ethereum, Cardano and Solana. You can also invest in six crypto-related funds and ETFs, which are a good way to get broader exposure to the digital currency market.
Pros
- Straightforward proprietary platform
- Follow more than 60 expert portfolios
- Vast range of stocks and shares to choose from
Cons
- Only available in the US – eToro is a top alternative for the UK market
- No stop-limit or stop-loss orders
- M1 does not employ any human financial advisors, versus Betterment and other popular automated advisors
#5 - Empower
Empower, previously Personal Capital, is a US-based and SEC-regulated trading platform and advisory firm. Clients can access pensions, robo-advisors and do-it-yourself investing in stocks, mutual funds, fixed-income products and ETFs. Millions of clients trust Empower with their long-term investments, attracted by the suite of free financial planning tools and excellent reputation.
"Empower is best for hands-off investors looking for a US-regulated platform and robo-advisor with free financial planning services. However, investors need to be willing to make a large minimum investment and pay higher than average fees for premium services."
- DayTrading Review Team
- Instruments: Stocks, ETFs, Mutual Funds, Fixed Income
- Regulator: SEC, FINRA
- Platforms: Own
- Min. Deposit: $1 (Cash), $100,000 (Robo Advisor)
- Min. Trade: Variable
Stocks Trading
Empower offers opportunities on a range of sectors spanning major US stock exchanges, from financial services to technology and manufacturing. We rate the commission-free pricing and thousands of mutual funds and ETFs available in the self-investing account or ready-made portfolios.
Pros
- Millions of active users and good industry reputation
- Highly rated mobile app available on Apple and Android devices
- Intelligent budgeting and portfolio management tools
Cons
- 0.49% - 0.89% management fees are high vs alternatives
- Limited choice of payment methods with only wire transfer
- No forex, commodity or crypto trading
#6 - Personal Capital
Empower (formerly Personal Capital) is a popular, SEC-regulated US financial advisory and investment platform that offers pensions, ready-made investment plans and do-it-yourself, commission-free investing through a large range of mutual funds, ETFs, individual equities and fixed-income securities. The broker has an impressive 3.4 million clients.
"Personal Capital (now Empower) is a great option for investors seeking a flexible way to build an investment portfolio or pension plan. It is a particularly good fit for US traders owing to the SEC oversight."
- DayTrading Review Team
- Instruments: Stocks, ETFs, Mutual Funds, Fixed Income
- Regulator: SEC
- Platforms: Own
- Min. Deposit: $1 (Cash), $100,000 (Robo Advisor)
- Min. Trade: Variable
Stocks Trading
Commission-free trading on US stock equities and ETFs as well as access to thousands of mutual funds are available through Empower's DIY investment account. You will also gain exposure to stock markets through the firm's ready-made investment plans and pensions.
Pros
- A wealth of free financial analysis and planning tools
- Segregated client funds with a top-tier custodian bank
- Well-known and popular investing platform
Cons
- An annual advisory fee of 0.89%
- No demo account
- No forex, futures or cryptocurrencies
#7 - Firstrade
Firstrade is a US-headquartered discount broker-dealer with authorization from the SEC. The company is also a member of FINRA/SIPC. With welcome bonuses, powerful tools and apps, plus commission-free trading, Firstrade Securities is a popular online brokerage. It is also quick and easy to open a new account.
"We recommend Firstrade for beginner investors looking to trade US stocks with no commissions. There is a wealth of free education plus premium-quality research and trading ideas from Morningstar, Briefing.com, Zacks and Benzinga."
- DayTrading Review Team
- Instruments: Stocks, ETFs, Options, Mutual Funds, Bonds, Cryptos, Fixed
- Regulator: SEC, FINRA
- Platforms: Own
- Min. Deposit: $0
- Min. Trade: $1
Stocks Trading
Firstrade offers commission-free stock trading on the NASDAQ, NYSE and OTC markets. Clients can invest in penny stocks through to blue chip stocks with extended hours trading, plus conditional orders and trailing stops. We also rated the dividend reinvestment program.
Crypto Trading
Take positions on dozens of leading cryptocurrencies with low fees and 24/7 investing. Traders need just $1 to start speculating on popular tokens like Bitcoin. Clients can also buy cryptos instantly in a few straightforward steps.
Pros
- No minimum deposit
- Premarket trading
- Access to education, research, and tools
Cons
- Visa Credit/debit card deposits and withdrawals not accepted
- No 24/7 customer support
- No forex or futures trading
#8 - Revolut
Revolut is a popular financial app that also offers trading on stocks, metals and digital currencies. The brand has over 25 million users worldwide with a choice of accounts, tools and services to suit different needs and budgets, including online investing and currency exchange.
"Revolut is suitable for casual stock traders looking for an easy-to-use app with transparent fees and a low minimum investment."
- DayTrading Review Team
- Instruments: Stocks, Cryptos
- Regulator: FINRA, SEC
- Platforms: Own
- Min. Deposit: $0
- Min. Trade: $1
Stocks Trading
Buy and own thousands of shares commission-free, including blue chip companies like Apple and Microsoft from the NYSE and NASDAQ exchanges. Fractional shares also allow investments from as little as $1, which will appeal to beginners and those on a budget.
Crypto Trading
Invest in 100+ crypto tokens using 30+ fiat currencies. You can buy, sell and transfer cryptos on the iOS and Android app. We like that traders can also choose to round up leftover cash from card transactions in crypto and use their crypto balance to make card payments.
Pros
- Straightforward joining process
- No inactivity charge
- 24/7 live chat support
Cons
- Relatively narrow product range
- No advanced trading platform
- No margin trading
What is the SEC?
The independent federal government agency aims to protect investors while ensuring the functionality of securities markets. The SEC also helps achieve transparency in the markets while preventing frauds, scams and malpractice.
To do the above, the regulatory body utilises a range of reporting and enforcement techniques. In addition, prospective members, such as forex brokers, must complete registration for a SEC licence before they can conduct business.
SEC Brokers
#1 - eToro USA
eToro is a social investing platform that offers stocks, ETFs, options, and crypto. The broker is well-known for its user-friendly community-centred platform and competitive fees. With FINRA and SIPC oversight and millions of users across the world, this brand is highly respected. eToro securities trading is offered by eToro USA Securities, Inc.
"eToro is a top pick for users looking for social investing and copy trading. With a low deposit, zero commissions and an intuitive platform, the broker will meet the needs of newer traders."
- DayTrading Review Team
- Instruments: Stocks, Options, ETFs, Crypto
- Regulator: SEC, FINRA
- Min. Deposit: $10
- Min. Trade: $10
Stocks Trading
Trade popular US stocks and ETFs with zero commissions while fractional shares and options are also available. The eToro Academy and excellent market research are also huge bonuses for newer investors.
Crypto Trading
eToro US leads the way in cryptocurrency trading. 1% fee for buying or selling crypto added to the spread (from 0.75% for BTC), with their own wallet service and the largest number of cryptos to trade in the market. eToro copy trading is only for cryptos. Crypto asset investing is highly volatile and unregulated. No consumer protection. Tax on profits may apply.
Pros
- The online broker offers an intuitive social investment network with straightforward copy trading on cryptos
- eToro USA Securities is a trustworthy, SEC-regulated broker that is a member of FINRA and SIPC
- A free demo account means new users and prospective traders can try the broker risk-free
Cons
- Narrower range of instruments than some competitors
- No MetaTrader 4 platform integration
#2 - Webull
Webull is a US-regulated trading app that offers stocks, options, forex, cryptos, ETFs, fractional shares and more. The firm is authorized by the SEC and FINRA with a strong trust rating. Low fees, no minimum investment and generous bonuses have made the discount broker popular with online investors.
"Webull is best for traders looking to buy and sell stocks on a user-friendly app with zero commissions."
- DayTrading Review Team
- Instruments: Stocks, ETFs, options, cryptos, forex, ADRs, fractional shares, OTCs
- Regulator: SEC, FINRA
- Min. Deposit: $0
- Min. Trade: 0.01 Lots
- Leverage: 1:4
Forex Trading
Webull offers a modest collection of 17 currencies, including majors like EUR/USD. Forex can be traded on the feature-rich investing app with real-time quotes and low spreads.
Stocks Trading
Webull offers a fantastic list of 2000+ US stocks, fractional shares, options, ETFs, OTC, and ADRs. There is no commission on stocks, ETFs, and options. Full extended trading hours is available while custom screeners and watchlists aid the decision making process.
Crypto Trading
Webull offers trading on popular cryptos like Bitcoin against the US Dollar. With 35+ tokens and premium analysis tools, traders can review market trends and identify opportunities in a few taps.
Pros
- Respected brand with strong regulatory oversight
- No commission or inactivity fees
- Brokerage account plus IRA
Cons
- High deposit and withdrawal wire fees for non-US residents
- Day trading is limited for customers with less than $25,000 deposited
- Sometimes sudden changes in trading conditions
#3 - Moomoo
Moomoo is an SEC-regulated app-based investment platform that offers a straightforward and affordable way to invest in Chinese, Hong Kong and US stocks, ETFs and other assets. Margin trading is available and the brand accepts low minimum deposits while also decent several bonuses.
"Moomoo will appeal to stock traders who want to build an investment portfolio through a user-friendly app with low to zero commissions."
- DayTrading Review Team
- Instruments: Stocks, Options, ETFs, ADRs, OTCs
- Regulator: SEC, FINRA, MAS
- Min. Deposit: $0
- Min. Trade: $0
Stocks Trading
Moomoo offers online US and Hong Kong stocks, and China-A shares trading across options, ETFs, ADRs, OTC, plus IPOs on a proprietary trading platform. The zero commissions, no account minimum and free level 2 data are standout features.
Pros
- Regulated by US Securities and Exchange Commission (SEC) and the Monetary Authority of Singapore (MAS)
- Attractive bonuses and financial incentives
- ‘Moomoo Token’ transaction security
Cons
- No phone or live chat support
- Aimed mainly towards US residents
- High margin rate fees
#4 - M1 Finance
M1 Finance is a US brokerage that allows users to build a customizable investment portfolio from a range of 6000+ stocks and shares, ETFs and cryptocurrencies. The innovative 'pie' based portfolio management system allows traders to build several portfolios with different aims, and the brokerage supports machine-learning tools that can provide automated portfolio management.
"US investors who want a straightforward, commission-free way to invest in stocks and crypto with AI-powered strategy support should consider M1 Finance."
- DayTrading Review Team
- Instruments: Stocks, ETFs, OTC stocks
- Regulator: SEC, FINRA
- Min. Deposit: $100
- Min. Trade: $1
Stocks Trading
M1 Finance offers a very large list of 6000+ stocks and shares listed on the NASDAQ and NYSE, as well as a small list of OTC securities. The shares are directly bought, sold and owned, meaning traders will have voting rights and benefit from dividends as well as capital gains. Commission-free trades and fractional shares will appeal to beginners and those on a budget.
Crypto Trading
M1 Finance users can open a crypto account to invest in 10 cryptocurrencies including Bitcoin, Ethereum, Cardano and Solana. You can also invest in six crypto-related funds and ETFs, which are a good way to get broader exposure to the digital currency market.
Pros
- Multiple portfolios – up to five accounts under the same login
- Trade fractional shares
- Commission-free with low fees
Cons
- Accounts with less than $20 and no trading activity for 90 days are charged a fee
- The way trades are placed puts transaction timing out of your control
- No stop-limit or stop-loss orders
#5 - Empower
Empower, previously Personal Capital, is a US-based and SEC-regulated trading platform and advisory firm. Clients can access pensions, robo-advisors and do-it-yourself investing in stocks, mutual funds, fixed-income products and ETFs. Millions of clients trust Empower with their long-term investments, attracted by the suite of free financial planning tools and excellent reputation.
"Empower is best for hands-off investors looking for a US-regulated platform and robo-advisor with free financial planning services. However, investors need to be willing to make a large minimum investment and pay higher than average fees for premium services."
- DayTrading Review Team
- Instruments: Stocks, ETFs, Mutual Funds, Fixed Income
- Regulator: SEC, FINRA
- Min. Deposit: $1 (Cash), $100,000 (Robo Advisor)
- Min. Trade: Variable
Stocks Trading
Empower offers opportunities on a range of sectors spanning major US stock exchanges, from financial services to technology and manufacturing. We rate the commission-free pricing and thousands of mutual funds and ETFs available in the self-investing account or ready-made portfolios.
Pros
- Highly rated mobile app available on Apple and Android devices
- Intelligent budgeting and portfolio management tools
- Millions of active users and good industry reputation
Cons
- No demo account for prospective users
- Limited choice of payment methods with only wire transfer
- No forex, commodity or crypto trading
#6 - Personal Capital
Empower (formerly Personal Capital) is a popular, SEC-regulated US financial advisory and investment platform that offers pensions, ready-made investment plans and do-it-yourself, commission-free investing through a large range of mutual funds, ETFs, individual equities and fixed-income securities. The broker has an impressive 3.4 million clients.
"Personal Capital (now Empower) is a great option for investors seeking a flexible way to build an investment portfolio or pension plan. It is a particularly good fit for US traders owing to the SEC oversight."
- DayTrading Review Team
- Instruments: Stocks, ETFs, Mutual Funds, Fixed Income
- Regulator: SEC
- Min. Deposit: $1 (Cash), $100,000 (Robo Advisor)
- Min. Trade: Variable
Stocks Trading
Commission-free trading on US stock equities and ETFs as well as access to thousands of mutual funds are available through Empower's DIY investment account. You will also gain exposure to stock markets through the firm's ready-made investment plans and pensions.
Pros
- Easy-to-use platform and financial dashboard
- Well-known and popular investing platform
- Mobile app
Cons
- US residents only
- Wealth management services only for customers with $100,000+ in invested assets
- No demo account
#7 - Firstrade
Firstrade is a US-headquartered discount broker-dealer with authorization from the SEC. The company is also a member of FINRA/SIPC. With welcome bonuses, powerful tools and apps, plus commission-free trading, Firstrade Securities is a popular online brokerage. It is also quick and easy to open a new account.
"We recommend Firstrade for beginner investors looking to trade US stocks with no commissions. There is a wealth of free education plus premium-quality research and trading ideas from Morningstar, Briefing.com, Zacks and Benzinga."
- DayTrading Review Team
- Instruments: Stocks, ETFs, Options, Mutual Funds, Bonds, Cryptos, Fixed
- Regulator: SEC, FINRA
- Min. Deposit: $0
- Min. Trade: $1
Stocks Trading
Firstrade offers commission-free stock trading on the NASDAQ, NYSE and OTC markets. Clients can invest in penny stocks through to blue chip stocks with extended hours trading, plus conditional orders and trailing stops. We also rated the dividend reinvestment program.
Crypto Trading
Take positions on dozens of leading cryptocurrencies with low fees and 24/7 investing. Traders need just $1 to start speculating on popular tokens like Bitcoin. Clients can also buy cryptos instantly in a few straightforward steps.
Pros
- Mobile app with advanced features and analysis
- Stop limit and trailing stop orders supported
- Accepts US traders
Cons
- Visa Credit/debit card deposits and withdrawals not accepted
- No 24/7 customer support
- No copy trading
#8 - Revolut
Revolut is a popular financial app that also offers trading on stocks, metals and digital currencies. The brand has over 25 million users worldwide with a choice of accounts, tools and services to suit different needs and budgets, including online investing and currency exchange.
"Revolut is suitable for casual stock traders looking for an easy-to-use app with transparent fees and a low minimum investment."
- DayTrading Review Team
- Instruments: Stocks, Cryptos
- Regulator: FINRA, SEC
- Min. Deposit: $0
- Min. Trade: $1
Stocks Trading
Buy and own thousands of shares commission-free, including blue chip companies like Apple and Microsoft from the NYSE and NASDAQ exchanges. Fractional shares also allow investments from as little as $1, which will appeal to beginners and those on a budget.
Crypto Trading
Invest in 100+ crypto tokens using 30+ fiat currencies. You can buy, sell and transfer cryptos on the iOS and Android app. We like that traders can also choose to round up leftover cash from card transactions in crypto and use their crypto balance to make card payments.
Pros
- Multiple deposit and withdrawal options including wire transfer
- Straightforward joining process
- 24/7 live chat support
Cons
- No advanced trading platform
- No margin trading
- Relatively narrow product range
Purpose
The SEC’s mission is split up into three distinct parts:
- Protect investors
- Facilitate capital formation
- Maintain and encourage market functionality
It’s worth noting the primary purpose is to supervise both organisations and individuals in the markets. Specifically, this means the agency turns its attention to brokers, exchanges, dealers, and registered investment advisors. Their scope extends from insider trading investigations to forex day trading rules and regulations.
Fortunately, you don’t need to wait for the news to find out about new regulations and filings. This is because the SEC facilitates investor access to registration statements, financial reports and other documentation via its EDGAR database.
The regulatory agency receives its mandate from several pieces of legislation:
- 1933 – Securities Act
- 1934 – Securities Exchange Act
- 1939 – Trust Indenture Act
- 1940 – Investment Company Act
- 1940 – Investment Advisers Act
- 2002 – Sarbanes-Oxley Act
- 2010 – Dodd-Frank Wall Street Reform and Consumer Protection Act
- 2012 – Jumpstart Our Business Startups (JOBS) Act
The SEC is financed by the taxpayer, as well as through registration and nominal fees. The SEC charges a tiny transaction fee on the value of all equities sold. This cost is separate to any broker commissions. These fees are given to the US Treasury, who then pay for the SEC’s regulation of brokers and markets.
History
In 1929 the US stock market crashed. As a result of false or misleading information, securities from a number of companies ended up worthless. Unsurprisingly, public confidence in the markets plummeted.
To repair the damage, following conferences and debate, Congress passed the Securities Act of 1933 and the Securities Exchange Act of 1934. Section 4 of the latter gave life to the SEC. The initial schedule directed them to ensure companies made truthful statements and that institutions, such as brokers, acted fairly and honestly.
Following expansion over the years, the meaning and purpose of the SEC have also extended to giving lending guidance and maintaining institution standings.
Structure
Divisions
The SEC headquarters can be found in Washington DC. The structure is relatively straightforward. The body has five divisions:
- Enforcement – The enforcement department works alongside the other divisions. They conduct investigations into securities violations and regulations. They have a range of powers, which will be broken down further below.
- Trading and Markets – This division manages self-regulatory bodies, including the FINRA and MSRB. It also includes broker-dealers and investment houses. The department plays a key role in amending regulations and monitoring industry operations. Note the SEC outsources the majority of enforcement to the FINRA. As such, all trading companies without regulatory oversight from other SROs must hold a licence with FINRA. Finally, individual traders must pass FINRA exams in order to be a registered representative.
- Corporation Finance – This department supervises disclosures made by public companies. It is also concerned with the registration of transactions and mergers.
- Investment Management – As the name suggests, this department manages registered investment companies, including investment advisors. Duties include responding to no-action letters and interpreting legislation and regulations.
- Economic and Risk Analysis – This division offers insight and analysis to aide SEC regulations and policy development. This includes potential risks and data analytics.
Offices
The SEC also has 11 regional offices. Some of the most relevant include the offices of:
- The General Counsel – This office is effectively the agency’s lawyer. It offers legal advice to the commissioner and other offices.
- Compliance, Inspections and Examinations – This office monitors and conducts investigations into brokers, exchanges, credit rating agencies, and investment companies.
- The Chief Accountant – This body plays a key role in enforcing accounting and auditing regulations.
- The Whistleblower – This office has proven particularly effective over the years. It came to life in the wake of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010. It offers a financial reward for information that leads to enforcement actions and sanctions in excess $1 million. Individuals can receive anywhere from 10% to 30% of the final sanctions.
Powers & Regulations
There are a number of actions the SEC takes to ensure compliance with regulations. One of the standard actions requires regulated companies to submit quarterly and annual financial reports. Company executives may also have to offer a narrative account, known as management discussion and analysis (MD&A). As mentioned above, consumers can head to the online EDGAR database to view important information.
Access to the above information is perhaps more important now than ever before. This is because you may get access to cryptocurrency and blockchain data to help you make informed investment decisions.
In the case of civil suits, the SEC primarily uses two sanctions:
- Injunctions – These aim to prevent future violations. The consequences of ignoring injunctions can range from fines to prison time. Before an injunction is given out, the body can demand documentation and testimony from suspects and witnesses.
- Penalties and disgorgements – The body can also take action that sees culprits pay hefty fines or give up profits. In addition, the commission may prevent individuals from acting as company directors.
Regulatory action can also include suspending registration, as well as cease and desist orders.
Note the regulatory agency does not have criminal authority. Instead, it can refer issues to the necessary prosecutors. Alternatively, it can seek civil action in a US District Court or an independent administrative proceeding.
It’s also worth bearing in minds the words used in liquidity rules and financial reporting manuals, for example, are often difficult to misinterpret. As a result, the regulatory agency is often successful when it comes to pursuing enforcement actions.
Track Record
The SEC has brought a number of enforcement actions against regulated and approved brokers. In fact, the regulatory body plays a significant role in almost every large case of financial malpractice.
Often, offences include fraud, misleading or false information and insider trading. In particular, the SEC was integral in bringing to justice a number of institutions in the wake of the 2008 financial crisis. The agency helped return billions of dollars to investors.
In fact, by the end, 204 bodies and individuals were charged and $4 billion in penalties were given out. Goldman Sachs faced the largest Wall Street penalty for monetary relief, coming in at a staggering $550 million.
The SEC has also come down on brokers over the years. More recently, however, it has ICOs in the crosshairs. In particular, enforcement action has been taken over marketing practices. For example, in 2017, the SEC brought an abrupt halt to the Munchee ICO.
Criticisms of the SEC
The majority of SEC criticism in recent years has been in regard to:
- Failing to require companies to publicly admit guilt
- Settling with large banks and institutions, instead of pursuing a trial
- Not using press releases to name and shame those in enforcement actions
- Handing out relatively minor sanctions, despite significant regulatory powers
- Imprisoning just one Wall Street executive for crimes related to the 2008 crisis
- Handing out waivers enabling protection from the collateral consequences of enforcement actions
Final Thoughts
There is no doubt SEC regulations play a key role in protecting consumers from fraudulent and misleading day trading brokers, among other financial institutions. Their enforcement activity is aggressive, despite some criticism. Public perception of the SEC is improving and they remain reputable in comparison to other bodies elsewhere in the world.
So before you pursue registration with a brokerage, check on the official SEC website that they are licensed on a regulated brokers list.