Uniform Securities Agent State Law (Series 63) Practice Exam

Which organization enforces the Securities Act of 1933 and various other federal securities laws?

1. The Federal Reserve Board

2. The Financial Industry Regulatory Authority (FINRA)

3. The Securities and Exchange Commission (SEC)

4. The Department of Justice

The correct answer is: The Securities and Exchange Commission (SEC)

The Securities and Exchange Commission (SEC) is the primary regulatory body responsible for enforcing the Securities Act of 1933 along with various other federal securities laws. The SEC was established to protect investors, maintain fair, orderly, and efficient markets, and facilitate capital formation. Its broad authority covers a variety of activities related to securities transactions including the oversight of the securities registration process, investigation of potential violations, and enforcement of legal consequences for misconduct. The Securities Act of 1933 primarily requires that any securities offered or sold to the public in the United States must be registered with the SEC, ensuring that investors receive significant information about the securities. The SEC's role is crucial in promoting transparency and preventing fraud in the securities market, which is central to maintaining investor confidence. Other organizations have distinct roles and functions; for instance, the Federal Reserve Board primarily deals with monetary policy and banking regulation, while the Financial Industry Regulatory Authority (FINRA) is a self-regulatory organization that focuses on brokerage firms and their registered representatives, enforcing compliance with established industry standards. The Department of Justice, although capable of pursuing criminal actions related to securities fraud, does not enforce the Securities Act per se but rather investigates and prosecutes violations of federal law. Thus, the SEC stands out