SEC Fraud

What is the Securities & Exchange Commission? The SEC’s mission is to “to protect investors, maintain fair, orderly, and efficient markets, and facilitate capital formation.” [Source: SEC.gov] In that role, the SEC investigates persons and organizations that may seek to violate basic laws and rules that govern the operation of the markets. A prime example of this is the latest release, dated March 20th, 2008, in which the SEC filed charges against AB Volvo for improper payments to Iraq under the U.N. Oil for Food Program, a charge that AB Volvo settled for $12.6M. The charges alleged that between 1999 and 2003, AB Volve made improper kickback payments and additional payments of nearly $8.5M.

The SEC was created with the Securities Exchange Act of 1934, which built upon the Securities Act of 1933, based on the findings of a committee that investigated the crash in 1929. (this was during the peak of the Great Depression) This act was meant to give investors, of which there were very few left, confidence that the markets would provide more reliable information and establish rules for honesty. The acts were based on these two basic premises:

• Companies publicly offering securities for investment dollars must tell the public the truth about their businesses, the securities they are selling, and the risks involved in investing.
• People who sell and trade securities – brokers, dealers, and exchanges – must treat investors fairly and honestly, putting investors’ interests first.

To learn more about the SEC, please review their about page.