Director FAQ

The Role of the U.S. Securities and Exchange Commission

By NACD Staff


Compliance, Ethics, and Liability Securities and Exchange Commission

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.

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