In an effort to push back against unnecessary bureaucracy at the Securities and Exchange Commission (SEC), U.S. Reps. Young Kim (R-CA), French Hill (R-AR), and Bill Huizenga (R-MI) offered legislation this week that would require the agency to periodically review its own final rules, verifying that such rules are working as intended.
“Recent events have made clear that the SEC’s current regulatory approach raises compliance costs for small businesses, investors and entrepreneurs,” Rep. Kim said, noting that the bill “will establish needed congressional oversight over the SEC and ensure its rules are modernized, not burdening small businesses, and are working as intended.”
The Review the Expansion of Government (REG) Act, H.R. 9526, which Rep. Kim sponsored and Reps. Hill and Huizenga cosponsored, would require the SEC to review every final rule up to three years after implementation; create a plan on how to carry out this review process; and report to Congress identifying each action or review the SEC failed to review and explaining why the agency failed to do so, according to a bill summary provided by the lawmakers.
“I am pleased to co-lead this legislation with my friend, Congresswoman Young Kim, to prevent regulatory overreach at the SEC,” said Rep. Hill.
The commission, Rep. Hill added, must follow its three-part mission: to protect investors, facilitate capital formation, and maintain orderly and efficient markets. “Any rulemaking that does not advance the SEC’s mission should be rescinded, which is why I support strengthening the guardrails around the commission’s rulemaking process,” he said.
According to the lawmakers, the SEC in the past year has proposed 33 new rules, nearly triple the average since 2012. And in October, the SEC’s then-Acting Inspector General Nicholas Padilla issued a report criticizing SEC Chairman Gary Gensler’s approach to rulemaking, saying it lacked input from senior SEC managers, jeopardized agency workers’ health, and limited time for public comment.
“The REG Act is a commonsense piece of legislation designed to rein in bureaucracy and require timely reviews of the SEC’s regulatory process,” Rep. Huizenga said. “The REG Act would also improve oversight of the SEC by ensuring the agency maintains its focus on capital formation and investor protection and does not exceed the authority granted to it by Congress.”
H.R. 9526 has been referred for consideration to the U.S. House Financial Services Committee.