What role does the Securities and Exchange Commission (SEC) play in U.S. financial markets?

The Securities and Exchange Commission (SEC) plays a crucial role in U.S. financial markets primarily by regulating the securities industry to protect investors. This regulatory framework is essential to maintaining investor confidence and ensuring that the markets operate fairly and efficiently. The SEC enforces securities laws, oversees the securities exchanges, and requires public companies to provide accurate information regarding their financial health. This helps prevent fraudulent activities and abuse, ensuring that investors have access to the necessary information to make informed decisions.

The importance of protecting investors cannot be overstated, as it fosters a stable and trustworthy investment environment, encouraging participation in the markets. By monitoring and enforcing compliance, the SEC helps to uphold market integrity, which is vital for the functioning of a robust economy.

In contrast, the roles mentioned in the other choices focus on areas outside the SEC's primary responsibilities. Facilitating the buying and selling of securities refers more to the functions of brokerage firms and exchanges rather than regulatory oversight. Setting interest rates is a function associated with the Federal Reserve, not the SEC. Lastly, managing the federal budget and national debt is the duty of the Department of the Treasury, again unrelated to the SEC's regulatory role.