Who is the SEC and what’s their job – really?
That’s a topic of hot debate these days.
Here’s the easy part:
- The SEC – Securities and Exchange Commission – is run by five presidential appointees, with no more than three from the same party.
- Their main job? Protect investors from getting scammed and make sure companies disclose and tell the truth.
Simple enough.
Here’s the debatable part:
Should the SEC decide whether an investment is good or bad?
Did you know each individual state used to decide?
Before the 1996 Blue Sky Laws, state regulators had the power to decide which investments were too risky for the public – which meant a company might be approved in one state but blocked in another.
One famous example?
In the early ’80s, a little tech company tried registering its stock in several states. Massachusetts took a look at it and said: ‘Nope … too risky.’ The little company didn’t even bother to register in other highly regulated states.
The company was Apple.
Looking back, it’s laughable. But the idea that regulators should judge the “merit” of an investment still creeps into the conversation—especially during times of market volatility. The lax regulatory environment leading up to the 2008 financial crisis makes a strong case that some oversight is necessary.
So… who decides what’s too risky? The SEC? Or you?
Queue in the biggest U-turn in the history of the SEC. (1)
Under Biden’s pick, Gary Gensler, the SEC got aggressive – particularly around crypto, ESG, and cybersecurity. He made it clear he wasn’t afraid to play watchdog and many felt he crossed the line on policy making.
Meanwhile, Paul Atkins, the Trump appointee, champions a leaner SEC that rolls back overbearing rules while still upholding basic investor protections.
Most notable – and controversial – are:
- Crypto firms are enjoying a little less heat and more room to run.
- Private equity markets (buying companies that aren’t publicly traded) were once reserved for the ultra-wealthy. Starting in 2026 they will be open to smaller investors’ retirement accounts. It’s worth noting these are highly risky, have zero liquidity, and widely unpredictable outcomes.
So, what do we do with all this?
The SEC’s job is to make sure the truth gets told. Our job is to decide if the investment is worth it.
Before you jump into anything, ask yourselves:
- Is it too good to be true?
- Can I explain the investment to a friend?
- Is it too risky for me?
- How might this investment make money?
- How much am I paying for it?
At the end of the day, there’s no regulator that can protect you from a bad decision. But with a little skepticism and a lot of curiosity, you should be able to protect yourself.
And if you ever need help cutting through the noise—I’m here.
Barbara
June 22, 2025
- Source: The Economist’s Money Talks episode “Sea change: the SEC under Trump 2.0” (May 29, 2025)
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