On Thursday, February 16th, the House Financial Services Committee will mark-up the "SEC Regulatory Accountability Act" introduced by Rep. Scott Garrett (NJ-R). The legislation would impose additional requirements on the SEC's cost-benefit analyses of rules and orders, including mandating that the SEC Office of the Chief Economist participate in the cost-benefit analysis process and specifying eleven new factors for the SEC to consider during its analysis. Last fall, SEC Chairman Mary Schapiro testified that the requirements under the bill were extensive and onerous. In addition, she raised concerns that requiring cost-benefit analyses for orders could have detrimental effects including delaying enforcement orders, exemptive orders and orders accelerating registration statements.
The SEC has been under recent scrutiny for inadequate cost-benefit analysis. Most recently, the SEC's proposed proxy access rule was struck down last year for failing to adequately assess the economic effects of the rule. Last week, Federated announced that it would take legal action to block money market reforms being considered by the SEC on the basis that the agency had not done sufficient cost-benefit analysis.