Final answer:
The SEC restricted buying stocks on credit, also known as margin buying, following the establishment of the Federal Securities Act to regulate the investment industry and prevent abuses such as those leading up to the 1929 stock market crash.
Step-by-step explanation:
When the Securities and Exchange Commission (SEC) was set up following the Federal Securities Act, it was tasked with regulating the investment industry, which included the trading of stocks and bonds. One of the specific actions the SEC took was to restrict buying stocks on credit, also known as buying on margin. This practice had contributed to the stock market crash of 1929, as it allowed investors to purchase stocks with only a small down payment, with the balance covered by a loan from a broker.