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This Month in Business History

Signing of the Securities Exchange Act of 1934

Harris & Ewing, photographer. Joseph Kennedy, center. 1934. Library of Congress Prints and Photographs Division.

Prior to the signing of the Securities Exchange Act by President Roosevelt on June 6, 1934, there was not much oversight of the United States securities market. The act created the Securities & Exchange Commission (SEC) and some regulation of large public companies really began.

In 1932 in the aftermath of the October 29, 1929 crash, the U.S. Senate Banking Committee began a series of hearings looking into the causes of the crash. These hearings, known as the Pecora Commission (or Pecora Investigation) went on until May 1934. Once the Securities Exchange Act was passed, Joseph P. Kennedy became the first chairman with Ferdinand Pecora who led the investigation, George C. Mathews, James M. Landis, and Robert E. Healy appointed commissioners.

The Securities Exchange Act of 1934 (Pub. L. 73–291, 48 Stat. 881) was not the only law passed to bring confidence back and establish some regulatory framework, Congress actually passed a series of laws. In 1933 Congress also passed the Securities Act of 1933 (Pub. L. 73–22, 48 Stat. 74) that required registration of most securities sales and Glass-Steagall Act (Pub. L. 73–66, 48 Stat. 162), which separated investment banking from commercial banking and created the Federal Deposit Insurance Corporation (FDIC), and the Public Utility Holding Company Act of 1935.

Today when many people think of the SEC they think of the filings corporations are required to file like the annual 10K and the quarterly 10Q, but the SEC is more than just that. It is an independent federal regulatory agency whose mission is protect investors; maintain fair, orderly, and efficient markets; and facilitate capital formation.

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