U.S. Chamber Report Proposes Transformational Reform of the SEC

Calls for Increasing Commission from Five to Seven Members as Part of 28 Recommendations to Turn Around Agency

WASHINGTON D.C.—The U.S. Chamber of Commerce’s Center for Capital Markets Competitiveness (CCMC) today released U.S. Securities and Exchange Commission: A Roadmap for Transformational Reform, a report by former SEC Secretary Jonathan G. Katz, which proposes 28 recommendations that, taken together, would fundamentally reform the SEC and restore it as the world's premier financial services regulator.

“Despite its more than 2,000 pages, the Dodd-Frank Act did nothing to fundamentally reform the regulators charged with its implementation, not least the SEC,” said David Hirschmann, president and CEO of the Chamber’s Center for Capital Markets Competitiveness.  “Businesses and investors alike need a modern, efficient, fair, and tough regulator.  The SEC has made some positive steps over the past several years, but incremental change will no longer do.  This report lays the groundwork for fundamental reform.”

Key lawmakers, regulatory officials, and experts discussed the report at today’s event, U.S. Securities and Exchange Commission: Working Towards Fundamental Reform.  This report serves as an update to the report issued by the Chamber in 2009.

The Chamber’s primary recommendations for creating an efficient and effective agency include: 

1. Develop a bold and clear plan:  The SEC needs to be restructured to ensure it has the right skills, technology and operational structure to supervise today’s capital markets.  In particular, significant management and operational weaknesses impair effective rulemaking, supervisory inspections, and enforcement. 

2. Put someone in charge of implementing the plan: The report recommends expanding the Commission to seven members and designating one commissioner as Deputy Chairman for Management and Operations, responsible for overseeing a comprehensive review and reorganization of the Commission.

3. Remove statutory and practical obstacles: This report recommends ensuring that the Commission has the ability to hire the right people with the right skills and that staff are put in positions to succeed or are removed.

4. Tie increased funding and resources to the transformation process: In addition to providing recommendations to enable the SEC to utilize its current resources better, this report recognizes that transformational change will require additional resources.  Congress should insist on timely and clear progress in implementing necessary changes as a condition for expanded funding.

“For more than a decade, the SEC has failed to keep pace with the rapidly changing markets, and recent scandals have further exposed shortcomings at the agency,” said Hirschmann.  “The level of change proposed in our report is overdue and extraordinary steps are needed.  We look forward to continuing our work to ensure that the U.S. is once again the world’s preeminent and best regulated capital markets.”

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.