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Does the SEC approve or disapprove securities?

User Banzay
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Final answer:

The SEC regulates the sale of securities and those who sell them, setting rules to ensure investor protection and market efficiency, but does not directly approve or disapprove securities. They enforce disclosure standards and oversee exchanges like the NYSE, ensuring adherence to SEC rules.

Step-by-step explanation:

The Securities and Exchange Commission (SEC) does not specifically approve or disapprove securities, but rather, it regulates and supervises the sale of securities and the individuals and entities who sell them.

The SEC enforces legal standards for disclosure of information relevant to securities, such as stocks and bonds, to protect investors and maintain fair, orderly, and efficient markets. The SEC also oversees the securities exchanges, such as the New York Stock Exchange (NYSE), where these securities are traded.

Although exchanges like the NYSE are not run by the U.S. government, they must adhere to rules established by the SEC. These rules are designed to prevent fraudulent activities and market crashes like the one in 1929 that led to the Great Depression.

It's important to note that while the SEC can regulate and establish rules for the financial markets, major changes to regulatory frameworks, such as an increase in the regulatory powers of entities like the Federal Reserve Bank, are typically the result of Congressional legislation.

User Shelia
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