Question
In: Finance
How effective is the U.S. Securities and Exchange Commission as a regulator of the fund raising...
How effective is the U.S. Securities and Exchange Commission as a regulator of the fund raising process by publicly listed corporations? Discuss.
Solutions
Expert Solution
The basic aim of setting up SEC that is Securities and Exchange Commission was to protect investors, ensure fair functioning of securities markets and helping in capital formation. Any company has to first register with SEC before offering its securities to the public. Financial services organisations also have to register with SEC before taking part in fund raising procresses.
In the aftermath of the great financial crisis in 2008, SEC ensured prosecution of the financial institutions which were behind the cause if the crisis. It collected a huge sum as penalties and other forms of monetary relief. However it was said that SEC did not do enough to prosecute white collar employees and senior managers who were involved and not found to be guilty of any wrongdoing. However, SEC did send a Wall Street executive to jail, which shows how SEC is regulating the fund raising process and punishing wrongdoers.
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