Securities Law Prof Blog

Editor: Eric C. Chaffee
Univ. of Toledo College of Law

Monday, December 19, 2011

Chamber of Commerce Recommends Transformational Reform at SEC

The U.S. Chamber of Commerce's Center for Capital Markets Competitiveness recently released a report on the SEC, entitled A Roadmap for Transformational Reform ( Download Chambersec20111214[1]).  Here is an excerpt from the Executive Summary:

In response to the stock market crash of 1929 and the Great Depression, Congress created the U.S. Securities and Exchange Commission (SEC). Throughout much of its history, the SEC has been the preeminent financial regulator, successfully overseeing the world’s leading capital markets. However, for more than a decade, the SEC regulatory and enforcement structures have failed to keep pace with rapidly changing markets. This is attributable to a variety of factors including, but not limited to, structural and managerial inefficiencies at the SEC, rapidly evolving markets, and the rise of intense global competition. The purpose of this report and its recommendations is to restore the SEC as the world’s premier financial services regulator.

Businesses and investors alike need a modern, efficient, fair, and tough regulator.  America’s ability to maintain the world’s deepest and most liquid markets hinges in part on having a strong, effective, and even-handed regulator. While outdated and broken regulations and ineffective application of regulatory authority were not the primary cause of the 2008 financial crisis, they should not be overlooked as contributory causes. The financial crisis has laid bare many of the shortcomings of an agency that is grounded in an outdated view of the world’s financial markets and is in profound need of transformational reform.

This need for transformational change supplants earlier proposals for reform. In 2009, the U.S. Chamber of Commerce released its first SEC reform report: Examining the Efficiency and Effectiveness of the U.S. Securities and Exchange Commission (2009 Report). While the 2009 Report made 23 recommendations for reform, they were proposals for incremental change. We fully recognize that over the past few years, the current leadership of the SEC has begun to address some of the key weaknesses of the agency and positive progress has been made in some areas. However incremental change will no longer do.

The Report contains 28 new recommendations, including two new Commissioners and the appointment of a Deputy Chairman to take charge of implementing changes.

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