Investor Protection
An investor refers to a person, who allocates his or her capital with an anticipation of getting some financial return from the investment. Investors can either finance an entrepreneur with the principal amount needed to start up a business or buy a stock from the stocks market. The Securities and Exchange Commission ensures that the investors are protected. Likewise, it regulates the securities markets and ensures close monitoring of the corporate takeovers in the United States. The commission promotes full public disclosure and protects investors from misleading and manipulative practices in the securities markets.
According to Mason, regulation is of a great importance for ensuring that the market reflects the forces of genuine supply and demand to avoid misleading the investors. This indicates that the market should be free from manipulation.
The Securities and Exchange Commission can uncover the schemes through cracking the software used by people, who hack online stock accounts. This is because millions of people are now able to buy and sell investments online through online brokerage companies. Therefore, the commission should strive to arrest sophisticated hackers, who are exploiting potential investors to their own advantage. Likewise, upgrading its systems in order to be in a position of tracing such schemes during their transactions and prosecute them can help to uncover the schemes. Moreover, the commission should combat online investment frauds and expose them to the public, so that investors can be protected. This is because the internet has created a platform for manipulating investors through blogs, tweets, and chat rooms to perpetrate the schemes.
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One of the rules states that all companies must file their periodic filings with the Securities and Exchange Commission. Thereafter, the commission avails this information to the investors through its online systems. Failure to do this on time can be very disastrous, since previous records of performance will mislead the investors. This is because the periodic filings update the investors on the companies’ performance. If such information is not availed during a recession or when a company is making losses, previous filings will deceive investors and cause them to incur losses in future. Similarly, companies may give false information to attract potential investors, if it is not strictly enforced.
