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Free «Security Exchange Commission» Essay Sample

The Security Exchange Commission (SEC) came into existence under the Exchange Act of the year 1934, which with the Security Act of 1933 formed the first federal securities legislation in the United States. Upon its creation, the country was under the Great Depression, and the agency was to oversee and bolster the assurance to investors in the United States capital markets. This was in line with providing investors with consistent information and making sure those individuals and companies deal with each other openly. This aims at consolidating the roles of the financial experts and the common fund trading to prevent cases of fraud and deliberate deception. The SEC comprises of five commissioners who serve for a minimum of five years and may belong to the same political affiliation (Dalla, 1995).

PART B: The history of presidential, congressional, and legislative constraints upon administrative agency powers

The SEC was formed under the federal constitution, the U.S Congress, federal government laws, and local lawmaking organizations to control crises and resolve issues of social problems or making sure that the complex matters of state, which are outside the knowledge of the lawmakers. The Congress had the responsibility of checking the executive powers in the creation of the commission so that the executive do not over exercise its powers. The congress had the duty of ensuring they formulate legislation, which will create an extraordinarily powerful administrative agency. The Congress also had to ensure that the commission powers are comprehensible, and provide a structure that provides checks and balances to limit the powers of the commission with the assistance of the courts on determining the extent to which the SEC meets these requirements. The rules and the regulations of the commission in most instances had the force of the legislation against persons. This led to the emergence of the critics to the commission that the formation of the commission outwits the constitutional directive that the laws were supposed to be created by elected officials (Kelly, 2005).



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According to the critics, the formation of administrative agencies was undemocratic, bureaucratic fourth arm of government, which had powers, which exceeded the one of the three branches of government-executive, legislature, and judiciary. The proponents of the administrative agencies argued that the agencies are formed and controlled by elected officials or the President. These administrative agencies are formed because of compelling statue, which originates from the state or federal structure of governance, which forms the agencies, legislates procedures, and gives the mandate to the agency in the rule-making role. In addition, the agencies incorporate the public in their rule-making procedures thus by the fact, the agencies are the will of the electorate. The proponents of the administrative agencies believe that the administrative agencies have the capacity to adjudicate both the minor and exceedingly multifarious disputes in a more effective and efficient manner as compared to the federal courts. The administrative agencies due to its swift nature in resolving disputes save judicial resources and promote faster determination of cases. The critics, on the other hand, argues that the swiftness in the determination of disputes by the administrative agencies at the expense of justice do not amount to virtues, but as the debates rages, the administrative agencies blossom. Any government representation in the administrative capacity is considered as an administrative agency. The executive is the administrative agency who anchors its powers on the federal constitution (Dalla, 1995).

PART C: The specific powers of the SEC

The SEC has four chief departments, which define the roles of the agency. The four departments within the SEC structure are the Department of Investment Management, which has the duty of protecting the investors and fosters capital creation through the oversight and controlling of the investment management business. There is also the Department of Corporation Finance, which controls the corporate disclosure of significant statistics to the investing public. The Department of Division of Trading fosters fairness, accountability, and efficiency in the marketing strategies. The other department is the Department of Enforcement, has the responsibility of investigating the securities legislations violations, and instigates civil and criminal proceedings (Kelly, 2005).

PART D:  Examples of the SEC exercising its executive, legislative, or judicial powers.

The recent decision by the Supreme Court to rule the independency of the commission indicates that Congress has no constitutional powers to cushion any administrative agency from the executive control, which means that the federal agencies may be undemocratic. The legal scholars and justice departments have supported this observation. It is seen that if the courts adopt this into their judicial system, it may have adverse effects on their practicability of federal administrative autonomy. The current ruling by the Supreme Court suggests that the President has plenary powers over the executive arm of the federal government, and the Congress lacks the powers on removal is unconstitutional. The private parties have made their suggestions that the Congress need to cushion the agencies (Dalla, 1995).

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PART E: Conclusion

The foundation of SEC is dated back to the 1930s under the Security Act. Its specific role was to control crises and resolve issues of social problems or making sure that the complex matters of state, which are outside the knowledge of the lawmakers. Critics on the powers of the Security Exchange Commission should not be warranted. This is because distinctive executive and presidential agencies resolves the competing aims of the Congress to restructure the executive, and shielding the principle functions of the president from encroachment from legislative. In addition, this will shield the courts’ quest to have a clear separation of powers (Ratner, 1997). The administrative agency should be given autonomy in carrying out its mandates to allow the commission preserve the holdings on the legal issues and provide sound guide to the future. The independency of the commission will increase its efficiency in determining the security matters. The commission will be also in a position to manage its affairs without due interference from the executive and the courts. The legislation should confer the president reasonable powers over the administrative and cushion it from abuse through proper legislation from the Congress. The Congress plays a critical role in determining the extent at which the president can exercise its control on Security Exchange Commission. This is because Congress has the role of tailoring legislation, which will cushion the federal agencies against tyrant regimes thus ensuring that the powers of the executive do not decrease the powers of the SEC in executing its mandate (Kelly, 2005).

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In the last few weeks, the Republicans controlled appropriations committee in the Congress reduced the SEC‘s fiscal 2012 budget applied by the agency by $22.5 million to $1.19 billion. This is amid the SEC’s responsibilities, which continues to, expand under the Dodd-Frank Wall Street Reform  and Consumer Protection Act. This is ironical since the commission generates a large amount of revenue to the treasury in the form of fines and other fines. The impact on the reduced funding will lead to decline in the number of prosecution cases. This will also reduce the efficiency of the commission on its ability to carry out extensive investigation on cases involving fraud. This will also slow the time in which the prosecution will take making the commission inefficient. In addition, the commission will have to lay-off some of its staff thus affecting the efficiency in protecting the investors against fraudsters (Dalla, 1995).


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