New Bill Would Rein In SEC Rulemaking
Rep. Wagner, R-Mo., says that the bill makes sure "the SEC doesn’t arbitrarily implement unnecessary and complex rules."
Rep. Ann Wagner, R-Mo., has re-introduced the SEC Regulatory Accountability Act, legislation that she says will protect retail investors from ”arbitrary and unnecessary” rules issued by the Securities and Exchange Commission.
Under the bill, the SEC would be required “to identify the problem a proposed regulation is seeking to address and conduct a cost-benefit analysis” of the rulemaking.
Wagner first floated the bill in 2017.
“Retail investors deserve consistency and transparency,” Wagner said in a statement. “The SEC Regulatory Accountability Act will help those saving for retirement, a down payment on a house, or for their children’s future by making sure the SEC doesn’t arbitrarily implement unnecessary and complex rules.”
Wagner added: “It is vital the SEC only issues regulations that are absolutely necessary, to avoid burdening everyday investors, and this legislation will ensure all regulations are justified with compelling evidence and relevant, up-to-date analysis.”
Before issuing a regulation, Wagner’s bill says the SEC must:
- Identify the nature and source of the problem that the proposed regulation is designed to address to assess whether any new regulation is warranted.
- Ensure that the proposed regulation is within the Commission’s jurisdiction and that the Commission has the experience and expertise to regulate the subject matter covered by the new regulation.
- Identify the market participants who will be affected by the new regulation.
- Utilize the SEC chief economist to assess the costs and benefits of the intended regulation and adopt it only upon a reasoned determination that its benefits justify the costs.
- Identify and assess available alternatives that were considered.
- Ensure regulation is accessible, consistent, in plain language and is easy to understand.
The SEC must also consider the effects of the regulation on:
- Investor choice
- Market liquidity
- Small businesses
- Competition in the marketplace
- Investor access
- United States’ economic competitiveness
The bill requires the SEC also to issue for notice and comment a proposal to amend or rescind the regulation, or publish a notice that no action will be taken on the regulation.
The SEC under Chairman Gary Gensler has been criticized for the barrage of SEC proposals that the agency has issued — with short comment periods — since January.
The agency received pushback from industry trade groups last week when it issued for comment its proposed new Regulation Best Execution, along with a broad package of equity market structure changes.
Pictured: Rep. Ann Wagner, R-Mo. Official photo.