Director FAQ: The Role of the U.S. Securities and Exchange Commission

In brief: Although governance for all types of corporations is largely determined by state corporation law, the U.S. Securities and Exchange Commission (SEC) nonetheless plays a significant governance role in public companies—namely, those that register to issue securities (stocks and notes) to the public. The SEC affects these firms—called issuers or registrants—mainly in two ways. First, the SEC promulgates and enforces rules under U.S. securities laws. Second, the Commission influences the standards of other entities, including the audit standards set by the Public Company Accounting Oversight Board (PCAOB) and the listing requirements of the U.S. stock exchanges. Many of the rules and requirements set or approved by the SEC have a direct impact on corporate governance.

This resource can help your board to

• understand the SEC’s internal structure and mission;
• become familiar with the major securities laws promulgated and enforced by the SEC;
• learn about the SEC’s rulemaking process; and
• ensure your company adheres to SEC rules from a legal and ethical standpoint.

Most relevant audiences: public company directors, pre-IPO company directors, audit committee members, risk committee members, and general counsel.