House Financial Services Committee Chairman Jeb Hensarling (R-TX) unveiled details of the Financial CHOICE Act – the Republican plan to replace the Dodd-Frank Act and promote economic growth. CHOICE stands for Creating Hope and Opportunity for Investors, Consumers and Entrepreneurs.

It included the expected verbiage about ending “too big to fail and bank bailouts. Some specifics are retroactively repealing the authority of the Financial Stability Oversight Council (FSOC) to designate firms as systematically important financial institutions (SIFIs). The proposal also calls for fundamental reforms of the CFPB, including renaming it the Consumer Financial Opportunity Commission.

I was hopeful it would include a repeal of the onerous Dodd-Frank provisions imposed upon public issuers that have nothing to do with securities laws, such as conflict minerals reporting. I was not disappointed. It provides for the repeal of “non-material specialized disclosures.” However there is nothing in there about getting rid of pay-ratio disclosures.

Other securities laws topics include:

  • Make all financial regulatory agencies subject to the REINS Act, bi-partisan commissions, and place them on the appropriations process so that Congress can exercise proper oversight.
  • Impose an across-the-board requirement that all financial regulators conduct a detailed cost-benefit analysis of all proposed regulations.
  • Reauthorize the Securities and Exchange Commission (SEC) for a period of five years with funding, structural, and enforcement reforms.
  • Institute significant due-process reforms for every American who feels that they have been the victim of a government shakedown.
  • Repeal the so-called Chevron deference doctrine.
  • Impose enhanced penalties for financial fraud and self-dealing and promote greater transparency and accountability in the civil enforcement process.
  • Allow the SEC to triple the monetary fines sought in both administrative and civil actions in certain cases where the penalties are tied to the defendant’s illegal profits. Give the SEC new authority to impose sanctions equal to investor losses in cases involving “fraud, deceit, manipulation, or deliberate or reckless disregard of a regulatory requirement” where the loss or risk of loss is significant, and increase the stakes for repeat offenders.
  • Increase the maximum criminal fines for individuals and firms that engage in insider trading and other corrupt practices.
  • All fines collected by the Public Company Accounting Oversight Board and Municipal Securities Rulemaking Board will be remitted to the Treasury for deficit reduction.
  • Impose enhanced penalties for financial fraud and self-dealing and promote greater transparency and accountability in the civil enforcement process.
  • Allow the SEC to triple the monetary fines sought in both administrative and civil actions in certain cases where the penalties are tied to the defendant’s illegal profits. Give the SEC new authority to impose sanctions equal to investor losses in cases involving “fraud, deceit, manipulation, or deliberate or reckless disregard of a regulatory requirement” where the loss or risk of loss is significant, and increase the stakes for repeat offenders.
  • Increase the maximum criminal fines for individuals and firms that engage in insider trading and other corrupt practices.
  • All fines collected by the Public Company Accounting Oversight Board and Municipal Securities Rulemaking Board will be remitted to the Treasury for deficit reduction.
  • Incorporate more than two dozen Committee or House-passed capital formation bills.