FINRA Series 6 Investment Company and Variable Contracts Products Representative ExaminationRegulatory Fundamentals and General Product KnowledgeEasy
A registered representative is explaining the role of the Securities and Exchange Commission (SEC) to a new client. Which of the following activities falls under the primary regulatory authority of the SEC?
- ASetting interest rates for federal funds.
- BRegulating interstate commerce and trade practices.
- CEnforcing federal securities laws to protect investors.
- DInsuring bank deposits up to a specified limit.
Show answer & explanationAnswer & explanation
Correct answer: C. Enforcing federal securities laws to protect investors.
The SEC's primary mission is to protect investors, maintain fair, orderly, and efficient markets, and facilitate capital formation by enforcing federal securities laws. This includes overseeing disclosure requirements for public companies and investment products.
Why the other options are wrong
- A. Setting interest rates is a function of the Federal Reserve.
- B. Regulating interstate commerce and trade practices is primarily the role of the Federal Trade Commission (FTC) and other agencies.
- D. Insuring bank deposits is the role of the Federal Deposit Insurance Corporation (FDIC).
SEC Primary Role
The Securities and Exchange Commission (SEC) is a federal agency responsible for protecting investors, maintaining fair and orderly securities markets, and facilitating capital formation.
- Protects investors
- Enforces federal securities laws
- Oversees securities markets
- Ensures disclosure for public companies
Memory trick: The 'SEC'urity guard 'enforces' market rules.