June 6 marked the 90th anniversary of the Securities Exchange Act of 1934 (known as the Exchange Act), which established the Securities and Exchange Commission (SEC). This Act, together with the Securities Act of 1933, forms the legal basis governing the capital markets in the USA. Built on the concept of a disclosure-based, merit-neutral regulatory framework, these laws have facilitated tremendous economic growth, job creation and innovation for the U.S. economy over the past 90 years.
“It’s a period that reflects our country’s rise to becoming an economic superpower, and not by mere coincidence,” emphasized Mark T. Uyeda, SEC commissioner at the Boston Regional Office. He explained that like any organization, the SEC is just a legal instrument that only exists on paper. “What gives life to the Commission is its people and its culture. Today we celebrate the dedication of the officials who have made this agency what it is over the last nine decades. We owe a debt of gratitude to all those who have preceded us. It is an honor to have Chairman Breeden, Chair Schapiro, and Chairman White with us this evening to represent those predecessors,” he noted.
To understand its history and creation, it is necessary to go back to 1930, when the U.S. faced immense challenges. Firstly, the 1929 stock market crash had shaken public confidence in our markets, and our economy suffered. “At that point in history, Congress had an alternative. Several states had already adopted securities laws that were often referred to as blue sky laws. In fact, before joining the Commission in 2006, I was a regulator at the California Department of Corporations, created by the California legislature in 1913 to oversee the offering and sale of securities,” Uyeda pointed out.
He continued: “Instead of adopting the merit-based blue sky laws that many states, including California, had implemented, Congress chose to implement a disclosure-based regime. It was a fortuitous choice, made long before the debate on the efficient market hypothesis became widespread, and it laid the groundwork for subsequent economic growth.”
In his opinion, by emphasizing transparency and accountability, the SEC laid the foundation for capital markets that thrive on the free flow of information. “Investors were empowered to make informed decisions on their own, while the SEC facilitated an environment of credible information and market integrity. This approach has been a fundamental reason why our markets have become the envy of the world,” he highlighted.
In September 1970, Chairman Hamer Budge succinctly expressed these points: “Investors, both large and small, can invest in our markets with the assurance that it is market forces, not manipulators, that determine the daily prices they pay and receive for their securities. It is vital to our economic growth and development that our securities markets continue to function fairly and without artificial restraints.”
According to Uyeda, who has been part of the SEC for the past 18 years, first as a staff member and then as a Commissioner, despite the achievements made, “we cannot rest on our laurels.” He indicated: “Just as the drafters of the Securities Act probably could not have imagined a world in which an investor could buy and sell baskets of securities on a tiny mobile communication device from anywhere in the country, we must reflect on how the SEC fulfills its mission of protecting investors, maintaining fair, orderly, and efficient markets, and facilitating capital formation in an ever-evolving technological environment.” Therefore, the Commissioner invites reaffirming the commitment to the principles on which this agency was founded. “I look forward to working with you on this journey,” he concluded.
