A Timeline of the SEC

From the great crash to the flash crash: a timeline of the Securities and Exchange Commission.

The Securities and Exchange Commission is charged with regulating the markets and protecting investors, but the agency's role has varied over its 78-year history. Below, a brief timeline.

1932: Pecora Hearings on Wall Street Abuses

Ferdinand Pecora, a Sicilian immigrant and a former assistant district attorney in New York City, investigates the 1929 stock market crash and its aftermath. Pecora uncovers a range of abusive practices by big banks and their affiliates, fanning the public’s outrage at Wall Street insiders.

1933: Federal Securities Laws Enacted

The Securities Act of 1933, dubbed the “truth in securities law,” requires companies issuing stock to register and to provide a prospectus to potential investors.

1934: Securities Exchange Act

The act creates the Securities and Exchange Commission. President Franklin D. Roosevelt taps notorious stock speculator Joseph Kennedy as its first chairman. Critics call Kennedy a “crook.” In response, FDR is said to have quipped, “Takes one to catch one.” In the end, Kennedy proves a committed watchdog.

1940: Investment Company Act and Investment Advisers Act

The acts govern mutual fund companies and require advisers to register with the SEC and to act as fiduciaries -- that is, in the best interests of their customers.

1975: Fixed Commissions Axed

The SEC eliminates fixed-rate commissions, paving the way for discount brokerage firms and turning many investors into do-it-yourself traders.

1986: Ivan Boesky Arrested

After using inside information on mergers and buyouts to amass $200 million in illegal profits, “Ivan the Terrible” is convicted of violating securities laws, sentenced to three years in prison and fined $100 million. Twenty-three years later, the SEC and New York’s district attorney nab hedge fund billionaire Raj Rajaratnam in a wide-ranging probe.

1987: Black Monday

The market drops 23% on October 19. In response, the SEC introduces “circuit breakers” to halt trading if an index drops or rises too far, too fast. In 2010, the SEC extends circuit breakers to individual stocks.

1999: Congress Repeals Glass-Steagall Act

Lawmakers remove impediments to banks’ engaging in securities activities. Ten years later, with banks reeling from losses in bonds backed by shaky mortgages, former Federal Reserve chairman Paul Volcker proposes to prohibit banks from trading for their own accounts. As of February 2012,the SEC is inundated with 17,000 letters commenting on the plan.

2001: Enron Scandal

The energy giant crumbles after revelations of illegal accounting practices. Shareholders lose more than $11 billion. The SEC puts into effect new accounting regulations after passage of the Sarbanes-Oxley Act.

2007: Subprime Mortgage Collapse

The U.S. real estate bubble explodes, causing a vicious ripple effect through global financial markets. The SEC brings dozens of cases, but suffers a setback in 2011 when a judge rejects a settlement between the SEC and Citigroup over the sale of mortgage-backed securities. The SEC appeals the decision.

2008: Madoff Scandal

Bernard Madoff confesses in December to running the biggest Ponzi scheme in history. The SEC is criticized for not detecting the scheme sooner, and an SEC counsel later faces conflict-of-interest questions in the case.

2009: Mary Schapiro Appointed SEC Chairman

The career regulator becomes the 29th head of the SEC and its first female leader.

2010: Flash Crash

On May 6, the Dow Jones industrial average plunges nearly 1,000 points within a few minutes, then quickly recovers. Despite its brevity, the crash dents the confidence of individual investors and focuses attention on automated trading techniques.

2010: Dodd-Frank Act

Congress passes the Dodd-Frank Wall Street Reform and Consumer Protection Act in response to the 2008 financial crisis. The SEC is saddled with the task of drawing up nearly 100 related rules.


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