The Securities and Exchange CommissionIn 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 from unfair practices in securities and financial markets. The SEC's purpose 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 existing laws, creating new laws, and ensuring that those laws are enforced. During the 1920s, approximately 20 million Americans took advantage of postwar prosperity by purchasing stocks on various stock exchanges. When the stock market crashed in 1929, many investors' fortunes were lost. Furthermore, banks lost large sums of money in the crash because they had invested heavily in the markets. When people feared that their banks would not be able to repay the money depositors had in their accounts, a “run” on the banking system caused many bank failures. After the crash, public confidence in the market and the economy dropped dramatically. In response, Congress held hearings to identify problems and seek solutions; the answer was found in the new SEC. The Commission was established in 1934 to enforce the new securities laws passed in the Securities Act of 1933 and the Securities Exchange Act of 1934. The two new laws stated that “Companies publicly offering securities must tell the public the truth about their assets, the securities they are selling and the risks associated with investing”. Second, “persons who sell and trade securities must treat investors fairly and honestly, putting the investors' interests first.”2Franklin Delano Roosevelt defeated Herbert Hoover by a landslide in the 1932 election and began work on his “New Deal”. Four key regulatory bodies were established in the New Deal: the National Labor Relations Board, the Civil Aeronautics Authority, the Federal Communications Commission, and the Securities and Exchange Commission. Wall Street was not enthusiastic about the impending regulation, but Congress was confident that the Street was seen as an easy target for the crash and depression that followed. In response, Congress created the SEC on June 6, 1934 to protect the public and individual investors from unfair practices in the financial markets. Commenting on the creation of the SEC, Texas congressman and future president Sam Rayburn admitted3 “that he didn't know whether the legislation passed so easily because it was so good or because it was so incomprehensible.