Who Reports to the SEC? Regulatory Hierarchy Explained

🏛️ Who Reports to the SEC? Regulatory Hierarchy Explained

In the U.S. financial system, the Securities and Exchange Commission (SEC) plays a central role in maintaining fair and efficient markets. But who exactly reports to the SEC, and how does the regulatory hierarchy work?

Let’s break it down step by step.

📌 What Is the SEC?

The Securities and Exchange Commission (SEC) is a federal agency responsible for regulating securities markets and protecting investors. It enforces laws related to public company disclosures, securities trading, and investment advisers.

🧭 Who Reports to the SEC?

The SEC oversees a wide range of market participants and entities that are either directly registered with or subject to its jurisdiction:

🏢 1. Public Companies

• Must file periodic reports (10-K, 10-Q, 8-K)
• Must disclose financial statements and material events
• Subject to Sarbanes-Oxley Act compliance

💼 2. Investment Advisers

• Registered Investment Advisers (RIAs) managing $110 million or more report directly to the SEC
• Must file Form ADV and maintain compliance programs

🏛️ 3. Broker-Dealers

• Must register with the SEC and FINRA
• Required to maintain capital reserves and follow strict reporting guidelines
• Must adhere to anti-fraud, suitability, and best execution rules

💰 4. Mutual Funds and ETFs

• Must register under the Investment Company Act of 1940
• Subject to disclosure, reporting, and governance standards

📊 5. Credit Rating Agencies

• Nationally Recognized Statistical Rating Organizations (NRSROs) must register and file with the SEC
• Subject to rules on transparency and conflicts of interest

🧾 6. Securities Exchanges and Alternative Trading Systems (ATS)

• Exchanges (like NYSE or Nasdaq) must register with the SEC
• ATS platforms must file Form ATS and operate within regulatory frameworks

🏦 7. Clearing Agencies and Transfer Agents

• Must register and comply with operational transparency and investor protection rules

🔁 Indirect Oversight: The Role of SROs

The SEC also delegates certain regulatory responsibilities to Self-Regulatory Organizations (SROs) such as:

• FINRA (Financial Industry Regulatory Authority)
• MSRB (Municipal Securities Rulemaking Board)
• Exchanges like NYSE or CBOE

These SROs supervise day-to-day activities of broker-dealers and trading platforms, but they ultimately report to the SEC and must comply with SEC oversight.

📋 Summary of Regulatory Hierarchy

🎯 Why It Matters

Understanding who reports to the SEC clarifies how U.S. capital markets stay regulated, ensuring transparency, fairness, and investor protection. Whether you’re a professional studying for a license or just learning how markets work, this hierarchy is at the core of the system.

👉 Learn more about U.S. financial regulation and exam preparation at finra-exam-mastery.com – your resource for mastering Series 7, Series 65, and more.