Commissioner Gallagher on the Future of the SEC

On October 16, 2014 at Fordham Law School, Commissioner Daniel M. Gallagher delivered remarks on The Securities and Exchange Commission—the Next 80 Years.  Commissioner Gallagher stated in part:

Over the next eight decades, the SEC’s fate will be intertwined, as it always has been, with that of our capital markets.  Despite robust market activity over the last few years, the U.S. capital markets, the manner in which they are regulated, and the SEC itself collectively face an existential threat:  the encroaching imposition of so-called prudential regulation on markets wholly unsuited to that regulatory paradigm.  To put it simply, the manner in which the Commission responds to this encroachment, as well as to the unprecedented, decade-long burden placed upon us by a hundred Dodd-Frank Act mandates, will determine whether the SEC remains as relevant in the 21st century as it was in the 20th – and more importantly, whether our capital markets, still the best in the world despite an onslaught of self-inflicted frictions, can continue to be the drivers of economic growth and prosperity that they have been for so long. . . .

So what, in practice, does this mean?  First, we need to affirmatively engage Congress and the Administration and work with them to remove the useless or counterproductive elements of the Dodd-Frank Act.  The emphasis is on affirmatively engaging – we cannot remain passive observers, speaking only when spoken to by policymakers, and expect to succeed in reforming Dodd-Frank.  Second, we need to become a savvier agency – specifically, an agency that serves as an efficient overseer of the capital markets and an aggregator and analyzer of critical market information through the better use of technology.  Finally, we need to affirmatively engage other regulators and relevant policymakers in the critical policy debates of the day – and for that matter, of the past five years.  I have been doing so since the beginning of my term and have found that most stakeholders are receptive to our participation in such debates.  We can learn from their perspective, and they from ours.