The Securities and Exchange Commission Essay Example | Topics and Well Written Essays - 1000 words

The Securities and transfigure Commission - Essay ExampleThe International Monetary Fund approximated more than $1 trillion on toxic assets and from bad loans were lost by big western banks from January 2007 to September 2009 (Reuters 1). The individual losses and exposures were unrevealed by these institutions in order to prevent runs on their banks or trading against their positions by their competitors in the markets which flowerpot further escalate their losses (Dobbs & Minyard 1). Hence, what the banks and other companies/institutions did was to refrain from lending money among themselves or to other businesses since they were suspicious as to their trading partners financial health and considered that the risk of loss was too high, opting to preserve their cash to set for any probable future losses (Dobbs & Minyard 1). The sources of liquidity was said to have desiccated for a count of companies with capital markets failing to perform properly (Dobbs & Minyard 1). This res ulted to breakdown and bankruptcies of influential companies or land-rich/cash-poor situation for energy companies (Dobbs & Minyard 1). The worldwide economy then was said to be in recession as the financial markets seized (Dobbs & Minyard 1). ... SEC 1). The federal official statutes and rules require companies to have full disclosure and transparency whenever it sells stocks or bonds to the public (Johnson 993), or to supply a detailed public disclosure document to both investors and regulators (Securities Act of 1933 5, 10, 15 U.S.C. 77e, 77j (2006) 17 C.F.R. pt. 230 (2011), whenever hugger-mugger businesses groom public offerings (Johnson 993). The Securities and Exchange Commission (SEC) reviews these disclosure documents, which in the case of Groupon, the SEC they required the latter to decree its disclosures in order to improve their accuracy (U.S. SEC, Letter from Larry Spirgel 1-14). This requirement however is non applicable to private placements wherein a company s ells an investment outside of the normal public securities markets (Securities Act of 1933 4(2), 15 U.S.C. 77d(2) 17 C.F.R. 230.506 (2011)), which often times evade examination by federal and state regulatory bodies (Johnson 151). Because these placements are private, they are hidden (Johnson 993) and the issuers tend to divulge far less information to investors than that required for public offerings (SEC v. Ralston Purina Co., 346 U.S. 119, 125-26 (1953) and SEC rule 506 on a lower floor 17 C.F.R. 230.506). Issuers also divulge this information only to qualified investors (17 C.F.R. 230.506 and 17 C.F.R. 230.501(a) (2011)). Regulators and even academics have gnomish or no access to the private placement disclosures (Johnson 993). Private placements are also said not to be liquid, difficult to price, and bear significant risks (Johnson