Essay The Securities and Exchange Commission

2302 Words Apr 16th, 2001 10 Pages
Morgan Bennett
Mr. Harris
History Honors- Per 5
April 2001
The Securities and Exchange Commission

In 1934 the Securities Exchange Act created the SEC (Securities and Exchange Commission) in response to the stock market crash of 1929 and the Great Depression of the 1930s. It was created to protect U.S. investors against malpractice in securities and financial markets. The purpose of the SEC was and still is to carry out the mandates of the Securities Act of 1933: To protect investors and maintain the integrity of the securities market by amending the current laws, creating new laws and seeing to it that those laws are enforced.
During the 1920s, approximately 20 million Americans took advantage of post-war prosperity by purchasing
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While manipulation of the markets was still possible, there were now risks. FDR decided that instead of naming Kennedy Secretary of Treasury, he would name him the first commissioner of the SEC. Thus, Joseph Kennedy was appointed to oversee the very activities he had participated in. A position appointed from FDR that was long overdue after the contributions of over $250,000 to FDR's convention campaigns. However, this resulted in FDR initially being accused of selling out to Wall Street. However, Kennedy was the right choice since he was the only one with the intimate knowledge of the very acts that the SEC was set up to prevent. It was a classic case of "the fox guarding the henhouse."
Joseph Kennedy proved to be a highly effective leader of the SEC. As one of his first official duties he delivered a national radio address: "We of the SEC do not regard ourselves as coroners sitting on the corpse of financial enterprise…We do not start with the belief that every enterprise is crooked and that those behind it are crooks." At this Wall Street realized that regulation didn't necessarily mean persecution. Although Kennedy only stayed one year as commissioner, he was most effective in establishing the credibility of the organization. Historian John Steele Gordon described his time in office: "Kennedy knew where the bodies were buried. But he

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