Legal Issues In The Financial Sector Essay

Question: 1- Discuss how administrative agencies like the Securities and Exchange Commission (SEC) or the Commodities Futures Trading Commission (CFTC) take action in order to be effective in preventing high-risk gambles in securities/banking, a foundation of the economy.
Investing in the securities market is profitable; however, stocks, bonds and other securities have the risk of losing value and are not guaranteed, unlike bank deposits, which are guaranteed by the federal government. Therefore, investors have to do plenty of research to protect the money they put into the securities markets. Sometimes investment companies in the past like JP Morgan have been involved in high-risk gambles in the market thus risking the investments of the public. Consequently, administrative agencies like the Securities and Exchange Commission (SEC) or the Commodities Futures Trading Commission (CFTC) have been set up to oversee the key participants in the securities market, like investment advisors, mutual funds and securities brokers. The agencies promote disclosure of important market-related information; prevent fraud and maintain fair dealing in the securities market.

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