With clear examples in details discuss why Phelps stock commission was established and outline it's main tasks and recommendations 4 pages
The Phelps Stock Commission was established in response to the significant financial crisis that occurred in the United States in the late 19th century. The Panic of 1893 brought about widespread economic disruption, including bank failures, widespread unemployment, and a severe decline in industrial production. As a result, the federal government sought ways to address the underlying causes of this crisis and prevent future occurrences.
One of the primary factors that contributed to the Panic of 1893 was the lack of transparency and regulation in the stock market. Companies were able to issue stock without providing accurate or complete information to investors, leading to market speculation and volatility. In response to these issues, the Phelps Stock Commission was established in 1895 to investigate the causes of the financial crisis and make recommendations for reform.
The main tasks of the Phelps Stock Commission were to conduct a thorough investigation into the practices of the stock market, identify areas of concern, and make recommendations for regulatory changes. The commission was made up of a group of experts in finance, economics, and law, who were tasked with gathering data, interviewing market participants, and analyzing market trends.
One of the key recommendations of the Phelps Stock Commission was the establishment of the Securities and Exchange Commission (SEC) in 1934. The SEC was created to oversee and regulate the securities industry, with the goal of protecting investors, maintaining fair and efficient markets, and facilitating capital formation. The SEC was given authority to enforce securities laws, investigate securities fraud, and require companies to disclose financial information to investors.
In addition to recommending the establishment of the SEC, the Phelps Stock Commission also proposed a number of other reforms to improve transparency and accountability in the stock market. These included requiring companies to provide accurate and timely financial information to investors, regulating the activities of stock exchanges, and increasing transparency in the trading of securities.
Overall, the Phelps Stock Commission played a crucial role in shaping the regulatory framework of the securities industry in the United States. By investigating the causes of the Panic of 1893 and making recommendations for reform, the commission helped to establish a more transparent, fair, and efficient market that continues to benefit investors and companies today.