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About this resource
- Publisher
- U.S. Securities and Exchange Commission
- Use
- One chief accountant's dated account of why the Commission and the securities laws were created; the speech expresses the speaker's views, not a Commission rule or finding.
- Version
- Speech of October 20, 1997; page last reviewed or updated October 20, 1997
- Relevant parts
- Opening account of the Commission's origin: the October 1929 crash, lost investor confidence, and the credibility of financial reporting
- Link checked
- Sep 13, 2026
Why the Commission was created
In his October 20, 1997 speech at Baruch College, Securities and Exchange Commission (SEC) Chief Accountant Michael H. Sutton described the Commission's origin. He states that it "was born in the wake of the greatest financial disaster the US has ever experienced, the stock market crash of October 1929."
He describes the effect on investors: "Substantial investment holdings became worthless in a matter of minutes, hours, and days, and investors and the public lost confidence in the fairness of the US securities markets."
The weakness the speech names
Sutton identifies the reporting problem directly: "One of the serious weaknesses in the system recognized at the time was that financial reporting to investors lacked credibility." He then records that Congress passed the Securities Act of 1933 and the Securities Exchange Act of 1934, which created the Commission.
What this source can establish
Use it as a dated SEC account of why public reporting requirements exist, and of the crash that preceded them. It cannot establish how far any market fell, because it gives no measurement. The speech expresses Sutton's views rather than a position adopted by the Commission, and it does not settle any current filing or accounting requirement.