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1. What is SEC?

SEC stands for Security and Exchange Commission. SEC is made of 5 commissioners that arehandpicked by the president and also approved by the senate. Its purposes are to ensure that securitiesmarkets operate in a fair and orderly manner, that the professionals in the securities industry dont

mistreat their customers and treat them fairly, that corporations state all material information aboutthemselves publicly so that investors can make knowledgeable business decisions, and to issue new lawsand amend laws pre-existing. In addition to what SEC already does, it also monitors the corporatetakeovers in the U.S.

To pursue these objectives, the SEC is split into 5 different divisions which each have their ownpurpose. These divisions are the Division of Corporate Finance, Division of Trading and Markets, Divisionof Inventory Management, Division of Enforcement, and Division Economic and Risk Analysis. There arealso many different offices in the SEC. Each office has its own purpose to execute.

2. What are the names of the ACTS of congress that created the SEC? (Briefly describe each act in oneparagraph)

One of the ACTS of congress that created the SEC was the Act of Security of 1933. It was passedduring the peak year of the Great Depression. The two main goals of the Act of was to ensure clearerfinancial statements so investors can make better informed decisions about investments, and toestablish laws against misrepresentation and fraudulent activities in the securities markets.

The other ACTS of congress that created the SEC was the Securities Exchange Act of 1934. Thisalong with the Act of Security of 1933 created the SEC and successfully restored faith in capital marketsby providing more reliable information and more honest dealings. The purpose of the Securities

Exchange Act of 1934 was to provide securities transactions to secondary markets and regulateexchanges and broke-dealers in order to further protect the investing public.

3. Find an article about the SEC in ACTION (Some thing they are enforcing or investigating) andsummarize the article in one or two paragraphs (8-10 sentences) type the name and webpage of thearticle above the Paragraph.

http://www.sec.gov/News/PressRelease/Detail/PressRelease/1370539726923#.Uo2dZMQ3uSo

SEC Charges Steven A. Cohen with Failing to SupervisePortfolio Managers and Prevent Insider Trading

Steven A. Cohen received charges on July 19, 2013 for taking part in illegal insider trades. TheSECs Division of Enforcement claims that Mr. Cohen received highly suspicious information about atrade by his two portfolio managers, Mathew Martoma and Michael Steinberg. After learning more in-depth of what went behind the scenes in the trade, it was too late for Cohen as he allegedly failed tocomply with the law. Information later informed that Martoma and Steinberg obtained non- public

http://www.sec.gov/News/PressRelease/Detail/PressRelease/1370539726923#.Uo2dZMQ3uSohttp://www.sec.gov/News/PressRelease/Detail/PressRelease/1370539726923#.Uo2dZMQ3uSohttp://www.sec.gov/News/PressRelease/Detail/PressRelease/1370539726923#.Uo2dZMQ3uSo

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material information back in 2008, breaking one of the objectives of the SEC which is to havecorporations make public all material information about themselves. As investigation proceeded, it wasshown that Cohen had at least 2 chances to see through Martoma and Steinbergs inside trades. But onboth occasions, Cohen f ailed to see the possible indication that inside trade was taking part. The SECsDivision of Enforcement agreed that Cohen has failed reasonably to supervise over Martoma and

Steinberg, having broken section 10(b) of the Exchange Act and Rule 10b-5 thereunder. A relief forCohen will be later determined through public interest of what the relief should be, including financialpenalties, a supervisory and financial services industry bar, and other possible reliefs.