A new whitepaper details the concerns businesses have over the Security and Exchange Commission’s (SEC) agenda and recommends reforms to improve the agency’s rulemaking.
The paper, titled Investors and the Markets First: Reforms to Restore Confidence in the SEC, argues that the agency has not lived up to its role in maintaining the strength of the country’s capital markets over the past three years. This has become an increasingly troubling issue, it states, as the SEC oversees annual trading of approximately $118 trillion in equities markets and $237 trillion in fixed-income markets and regulates the activities of more than 29,000 companies. Chiefly, the whitepaper says the SEC has ignored its obligations under the Administrative Procedure Act (APA), which governs the rules and procedures for how federal agencies are supposed to approach regulatory changes.
“The SEC has undertaken an unprecedented and often unlawful rulemaking agenda that, without sound justification, will radically redesign the foundation of our capital markets,” the paper states.
To improve the process and restore market confidence in the agency’s role as an impartial regulator, the paper recommends five reforms the SEC should enact:
- Conduct an analysis of all interrelated and interconnected rules (existing and contemporaneously proposed) for each proposed rule and amend or repeal rules as necessary to account for such interconnections.
- Provide a minimum of 60-day comment periods for proposals calculated from the date published in the Federal Register (unless there is an emergency).
- Have a third party perform and publish for public comment no later than 90 days from the date of enactment a post-adoption cost impact assessment for each major rule the SEC has adopted in the past three years.
- Integrate and expand on the mission of several offices at the SEC to appropriately resource mandates that focus on market innovation and capital formation.
- Publish an annual report on the exemptions granted from rules and adjudicate exemptive applications within 180 days.
“America’s capital markets fuel the growth engine that creates jobs and prosperity for Main Street investors,” said Tom Quaadman, the executive vice president of the U.S. Chamber of Commerce Center for Capital Markets Competitiveness. “The SEC has taken its eye off the ball with a rushed and interconnected agenda that often fails to account for the real-life costs and benefits of its rules, including how they might limit capital formation. Our common-sense reforms would promote a rulemaking process that renews the SEC’s focus on its tripartite mission of investor protection, capital formation, and competition.”
The business groups that collaborated on the white paper include the U.S. Chamber of Commerce, American Investment Council, Business Roundtable, Investment Company Institute, Managed Funds Association, and National Venture Capital Association. The full white paper is available here.