3.2.1 Creation of the SEC
The SEC was created at a time when reform was vital for restoring investor confidence.
Before the Great Crash of 1929, there was little support for federal regulation of the securities
markets. This was particularly true during the post World War I surge in securities
activity. It was considered that creating a federal government requirement for financial disclosure,
to prevent the fraudulent sale of stock, was not warranted. However, this view very
quickly changed when investors lost millions of dollars in the Great Crash, as described in
Box 3.3.