On November 2, 2023, the U.S. House of Representatives Financial Services Subcommittee on Capital Markets held a hearing on what was termed, ‘The SEC’s Agenda: Unintended Consequences for U.S. Capital Markets and Investors” to explore whether the enforcement actions and new proposals and regulations put forth by the SEC was inadvertently harming the market.
The hearing was in response to the growing opposition of SEC’s approach to rulemaking, enforcement and lack of bipartisanship under the leadership of Chair Gary Gensler.
The hearing included professionals in the finance and securities sectors who believed that the SEC’s approach to regulation was detrimental to the wellbeing of what they were tasked to protect.
The hearing began with an opening statement from Chairman Ann Wagner who noted that capital markets were already one of the most regulated sectors in the U.S. economy. Wagner touched on the role of the SEC to “uphold the integrity, transparency and stability” of the country’s capital markets.
Addressing the SEC’s approach to rulemaking and enforcement under Gensler’s leadership, Wagner voiced concern over the content of the rules and the SEC’s process for establishing those rules in recent months, questioning if the speed at which they were proposed and implemented provided for thorough evaluation and consideration for costs and implications.
In addition, Wagner brought into question, the limited time-period allowed for public comments on proposed rules, stating, “I am going to enter into the record a record of nearly 20 rulemakings and proposals that have undergone less than 30-day comment periods, for the record, so that it is clear that this is happening.”
Perhaps, most concerning is the SEC’s refusal to adhere to checks and balances by Congress.
Read Wagner’s full opening statement here:
https://financialservices.house.gov/news/documentsingle.aspx?DocumentID=409020
This is not the first time that Gensler has come under fire for his leadership. In April 2023, Congress held a hearing stating that the SEC is overstepping in its reforms and failed to provide ample time for feedback.
Gensler defended the SEC’s work, saying, the agency’s rulemaking was, “grounded in legal authorities granted by Congress.” He finished by saying, “the goal is to protect our 'clients': U.S. investors.”
However, the U.S. Chamber of Commerce submitted a statement which described the SEC’s rulemaking as, “torrential, disjointed and rushed.”
Jacko Law Group works with investment companies, advisers, advisers to private funds and others who continue to be heavily impacted by the recent deluge of new proposals and regulations. We help our clients understand their regulatory obligations, and make sure they remain informed and aware of any changes.
If you would like our legal team to review your compliance program, feel free to give us a call at 619.298.2880.
