A Reform Agenda for the Securities and Exchange Commission
Apr 8, 2024
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Financial regulation expert Jennifer Schulp discusses ways to reform the Securities and Exchange Commission, focusing on increasing regulatory comments, aligning actions with statutes, and following proper procedures. Topics include shortcomings of the SEC, public comments on rule proposals, transparency concerns in rulemaking activities, bias in ALJ process, and the importance of oversight and reform efforts.
SEC needs to improve public comment process for rule proposals to enhance quality.
SEC should conduct detailed analyses on costs and benefits of rules to ensure justification.
Deep dives
Challenges of Accountability and Public Feedback at the SEC
The Securities and Exchange Commission (SEC) faces challenges with accountability and public feedback. The agency has struggled with receiving proper public comment on rule proposals, impacting the quality of rules set forth. The shorter timelines for public comment under the Gensler administration have hindered the effectiveness of public feedback. This deficiency in public input extends beyond the current administration, signaling a systemic issue within the SEC.
Extent of SEC's Reach Beyond Statutory Authority in Rulemaking
The SEC has faced criticism for overreaching its statutory authority in rulemaking. Cases like the climate disclosure rule and regulations for private fund advisors have been challenged in court. The agency has been found lacking in conducting detailed analyses on the costs and benefits of its rules, a longstanding issue that affects the quality and justification of regulations.
Transparency Issues Impacting SEC's Operations
Transparency concerns plague the SEC's operations, particularly regarding procedural transparency. Issues like the gag rule on settling defendants hinder transparency and limit individuals from sharing their experiences. The SEC's use of administrative law judges raises transparency issues by offering a less public process compared to federal court proceedings. These transparency challenges highlight the need for reforms within the SEC to enhance openness and accountability.
There are several ways the Securities and Exchange Commission could be reformed to make the agency more welcoming to regulatory comments, align its actions with statutory authority, and follow proper administrative procedures. Jennifer Schulp explains.