On September 15, 2011, at a hearing titled "Fixing the Watchdog: Legislative Proposals to Improve and Enhance the Securities and Exchange Commission," the House Committee on Financial Services considered two legislative proposals that would reorganize the SEC.
The first legislative proposal, the SEC Modernization Act of 2011 (the "Modernization Act"), proposes to mandate the organization of the SEC by requiring the SEC to have the following divisions:
- Corporate Finance
- Investment Management
- Trading and Markets
- Office of the Chairman
- Office of Risk Strategy and Financial Innovation
- Office of Compliance, Inspections and Examinations
- Office of the Chief Economist
- Office of Equal Employment
- Office of Investor Education
- Office of Ethics
Additionally, the Modernization Act proposes to mandate that certain functions be part of the Office of the Chairman, which would include the Offices of the General Counsel, Secretary, Chief Accountant, External Affairs and Chief Officer. Also, the Modernization Act proposes to combine the functions of some offices while creating an independent ombudsman who would report directly to the chairman.
The second legislative proposal, the SEC Regulatory Accountability Act (the "Regulatory Act"), proposes to modify the SEC's rulemaking processes, including how the SEC conducts its cost-benefit analysis. In addition, the Regulatory Act would require the SEC to periodically review its regulations to determine if they are outmoded, ineffective, insufficient or excessively burdensome, and would require the SEC to modify, streamline, expand or repeal regulations in accordance with such review.
The legislative proposals have come under attack by many opponents. At the hearing, former SEC Chairman Harvey Pitt, testified that the proposed reorganization included in the Modernization Act is "too restrictive" and "would likely cause certain critical SEC functions to lose independence." In addition, SEC Chairman Mary Schapiro noted her concerns about the legislation mandating a specific structure for the internal operations of the SEC and that some of the rules proposed by the legislation are duplicative of current rules, contradictory and confusing.
The Modernization Act is available at:
The Regulatory Act is available at:
Information about the hearing is available at: