A number of trade associations (The Business Roundtable, the American Investment Council, The Center for Capital Markets Competitiveness of the US Chamber of Commerce, the Investment Company Institute, the Managed Funds Association, and the National Venture Capital Association) recently published a report titled, “Investors and the Markets First: Reforms to Restore Confidence in the SEC.” The report notes that the trade associations have observed a shift in the SEC’s regulatory approach “that threatens the resiliency of our capital markets and the financial well-being of American investors.” The trade associations take the view that “the SEC’s approach does not generally reflect a single cohesive framework to improve efficiency, competition, and capital formation in the capital markets.” The report claims that the SEC rulemaking presents the following issues:

  • The SEC has ignored its obligations under the Administrative Procedure Act;
  • The SEC has not considered the interconnectedness of its rules;
  • The SEC has adopted final rules that differ drastically from the proposals;
  • The SEC has exceeded its statutory authority;
  • The SEC has not promoted capital formation; and
  • Many of the SEC’s rules will disrupt the orderly functioning of the markets.

The trade associations call for consideration of the following reforms:

  • Require the SEC to affirmatively conduct an analysis of all interrelated and interconnected rules for each proposed rule and then amend or repeal rules as necessary to account for such interconnectedness;
  • Require the SEC to provide comment periods for proposals with a minimum of 60 days, calculated from the Federal Register publication date, unless there is an emergency;
  • Require a third party to 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 of the SEC, including, for example, the Office of the Advocate for Small Business Capital Formation; and
  • Require the SEC to publish an annual report on the number of exemptions granted or exemptive rules adopted to promote capital formation and innovation and the actions the SEC has taken to promote financial security and review and adjudicate exemptive applications under the Investment Company Act of 1940 for relief in no more than 180 days.

Access the full report.