Republicans on the House Financial Services Committee have publicly criticized SEC Chair Gary Gensler for what they deem to be a flawed regulatory approach. In a letter led by Committee Chairman Patrick McHenry, they express direct concerns to Gensler. They are troubled by the Commission's reluctance to consider stakeholder feedback and its failure to conduct thorough economic analysis.
The lawmakers accuse the SEC of neglecting economic impact evaluations and ignoring stakeholder feedback. They urge the Commission to halt the implementation of interconnected rules until their cumulative effects are fully assessed. Moreover, they call for additional time for public and market participants to review and comply with new regulations.
The letter also cites the SEC staff's own concerns about an "aggressive agenda" and shortened public comment periods, as indicated in the October 2022 Inspector General's Statement on the SEC's Management and Performance Challenges. The lawmakers point out inadequate cost-benefit analyses, overwhelming costs for smaller firms, and insufficient time for the public to evaluate and respond to proposals.
The House Financial Services Republicans insist that before any rule is finalized or implemented, the SEC should conduct a comprehensive cost-benefit analysis of the aggregate impact of rules in these key areas and seek public comment on this analysis. They also propose a workable, staggered schedule for public comment on adoption and implementation, especially considering the significant compliance and operational burdens that may be insurmountable for smaller or emerging firms.
According to the letter, many of the SEC's proposals revolve around three critical areas: private funds, equity market structure, and corporate governance. Given the interrelated nature of these proposals, the Republicans are demanding a carefully considered evaluation of their cumulative effect and a staggered compliance plan to prevent potential burdens.
The letter concludes by emphasizing the need for a fair and transparent rulemaking process. The SEC has yet to respond, intensifying scrutiny over its regulatory approach.