Question

Do you think a lot of fraud goes uncovered with the SEC?

Answer 1

ANS: The U.S Securities & exchange commission (SEC) is an independent federal government agency responsible for protecting investors interest, managing fairly, regulated & oderly trading in the market. The SEC holds the primary responsibility for enforcing the federal laws, via framing the rules & regulations within which the securities market operates. Irresepective of size, form & legal status, SEC investigate all companies that seeks to raise capital from U.S investors. SEC is primarliy concerned with the disclosing of the market related information, maintaining the ethics of fair dealing & trading & protecting against the fraud.

SEC has also a whistle-Blower program, in which an individual is awarded with the incentives who came forward & report the violations of federal law to the SEC. Apart from this, SEC also have toll-free number & E-mail ID, through which possible securities fraud can also be reported. SEC is totally dedicated for below major purpose -

• To protect the interest of investors
• To maintain fair & efficient market
• Create Accountability & Transperancy
• Facilitate capital formation.

To deliver the above duties, there are five major divisions of SEC -

1. Corporate Finance
2. Tradings & market
3. Enforcement divison
4. Investment Management
5. Economic & risk Analysis.

So, finally it shall be concluded that SEC is following fully organised pattern in order to crub the fraud or willful mis-statements, & for this they are taking all the possible initatives. Thus, there are low chances of major fraud remains un-covered from the eyes of SEC. Moreover, Its the Sole responsibility of the management to prevent & detect the fraud & errors & brings to the notice of public & design such Internal control or the such mechansim to avoid their occurance. So, when management itself gets involved in fraud (i.e Management Fraud), then there will be the chances of non-detection of Fraud or errors by the SEC.