U.S. Chamber Renews Call for Fundamental Management and Operational Reform at SEC

‘America’s Job Creators Need an Effective Cop on the Beat that Understands the Markets It is Regulating,’ Hirschmann Says

WASHINGTON D.C.—In response to a Congressional study recommending SEC reform, the U.S. Chamber of Commerce Center for Capital Market’s Competitiveness (CCMC) today renewed its call for fundamental management and operational reforms at the agency.

“America’s job creators need an effective cop on the beat that understands the markets it is regulating,” said David Hirschmann, President and CEO of the Chamber’s Center for Capital Markets Competitiveness. “While some initial progress has been made in the past two years, we can no longer afford half-steps and partial solutions. We look forward to working with the SEC and the Congress to implement concrete reforms that will create an effective, transparent, and modern regulator. The current basic SEC structure was designed to regulate markets in 1975. A lot has changed since then, but our securities regulators haven't. 2008 was more than a wakeup call, but fundamental and long overdue reform has not followed. The Chamber believes regulators need sufficient resources to do their job – but resources alone will not begin to address the deep operational, technological, and management challenges within the SEC.”

As Congress continues a series of hearings on the management and operations of the Securities and Exchange Commission over the next several weeks, the Chamber is highlighting its 2009 report, which offers 23 concrete steps to address overarching issues related to the organizational structure and management shortcomings of the agency. Among those recommendations include:

• Create a Chief Operating Officer (COO) position with sufficient authority to oversee daily operations throughout the SEC.
• Establish a coordinating council, chaired by the COO, to resolve issues or disagreements involving more than one division or office.
• Expand the breadth of staff expertise. Legal and accounting expertise should be complemented with staff experts in capital markets operations and the business operations of regulated entities as well as financial economics.
• The Division of Trading and Markets and the Division of Investment Management should be realigned into a Division of Investor Protection and Retail Financial Services Regulation and a Division of Market Oversight and Operations.
• Create an accelerated conditional approval process for new investment products or services.

“These recommendations are designed to improve management and operations, inject the concept of coordination amongst divisions, increase consistency and communication, and strengthen the Commission in key areas, said Hirschmann. “A strong and informed beat cop creates a level playing field for all. By creating a 21st century regulator, Congress will press the pedal and stoke the engines of job growth.”

The study focuses on recommendations that can be implemented under current SEC jurisdiction and can increase the agency’s ability to effectively allocate regulatory resources in the short-term. The study’s findings are based on more than 60 interviews with a broad range of experts, including current and former SEC staff, securities law practitioners and Chamber members.

Since its inception in 2007, the Center for Capital Markets Competitiveness has led a bipartisan effort to modernize and strengthen the outmoded regulatory systems that have governed our capital markets. The CCMC is committed to working aggressively with the administration, Congress, and global leaders to implement reforms to strengthen the economy, restore investor confidence, and ensure well-functioning capital markets.

The U.S. Chamber of Commerce is the world’s largest business federation representing the interests of more than 3 million businesses of all sizes, sectors, and regions, as well as state and local chambers and industry associations.

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