4 ms·

Why would the SEC have any jurisdiction over private companies??

• cosgroveb 16y ago
  They have jurisdiction over trading of securities, which shares of private companies are... The Securities Exchange Act regulates the general-public trade in securities and amendments have extended the SECs mandate to include OTC trades as well as regulate companies that aren't listed on exchanges.
  • sabat 16y ago
    I didn't realize that -- seems like government overreach to me (a political moderate).
    • cosgroveb 16y ago
      Perhaps, but keep in mind that a lot of these regulations were enacted during times of economic crisis (the original Act was passed during the Great Depression).
      • endlessvoid94 16y ago
        Interesting. It seems to me that they should only then be utilized in similar economic climates.
      • yummyfajitas 16y ago
        This seems like a good argument against passing laws in response to a crisis. (See also: http://en.wikipedia.org/wiki/Sedition_Act_of_1918 http://en.wikipedia.org/wiki/Sedition_Act_of_1918 http://en.wikipedia.org/wiki/Patriot_act http://en.wikipedia.org/wiki/Patriot_act )
• tokenadult 16y ago
  Private companies are actors in interstate commerce, so there is a classic constitutional basis for federal regulation of what they do. http://topics.law.cornell.edu/wex/Commerce_Clause http://topics.law.cornell.edu/wex/Commerce_Clause Article 1, Section 8, Clause 3 of the United States Constitution enumerates the power of Congress "to regulate commerce with foreign nations, and among the several states, and with the Indian tribes." The Commerce Clause, by extensions throughout more than a century of Supreme Court cases, is actually the basis for perhaps as much as 90 percent of all federal legislation on all subjects, including subjects not as noticeably related to interstate commerce as security trading. The SEC gained many of its current powers in the aftermath of the Great Depression, which has been taken as a negative example of what happens when there is too little government regulation of financial markets.
• trotsky 16y ago
  They have jurisdiction over companies with more than 500 shareholders, whether or not they are traded on any exchanges. This is to prevent abuses where companies effectively go public by selling stock widely but fail to register to avoid the public disclosure requirements. What the SEC is looking into is the current trend of forming an LLC to buy private shares on a secondary exchange and then selling ownership in the LLC. This allows the owners of the LLC to invest indirectly in the private company effectively increasing the number of shareholders over 500 but not currently triggering the public disclosure requirements. The SEC may move to count these LLC owners as shareholders of the target company.