Which organization functions under the SEC's oversight to enforce federal securities laws?

The correct answer is Self-Regulatory Organizations (SROs). SROs, such as the Financial Industry Regulatory Authority (FINRA) and the New York Stock Exchange (NYSE), operate under the oversight of the Securities and Exchange Commission (SEC) to enforce federal securities laws. They have the authority to create and enforce industry regulations, conduct examinations, and handle disciplinary actions against member firms and individuals. This role is vital in maintaining fair and orderly markets and investor protection, as SROs ensure that their members comply with the applicable regulations.

While organizations like the CBOE (Chicago Board Options Exchange) and NASAA (North American Securities Administrators Association) play important roles in the securities industry, they do not have the same level of enforcement authority as SROs. The CBOE focuses primarily on options trading and market functioning, and while NASAA addresses state securities regulation, it does not enforce federal laws. The Federal Reserve Board (FRB) oversees monetary policy and banking institutions, rather than securities laws. Therefore, SROs are specifically tasked with regulating and enforcing compliance in the securities sector under the SEC’s regulatory framework.