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8 Brook. J. Corp. Fin. & Com. L. 361 (2013-2014)
Sec Regulatory Analysis: A Long Way to Go and a Short Time to Get There

handle is hein.journals/broojcfc8 and id is 379 raw text is: SEC REGULATORY ANALYSIS: A LONG WAY TO GO AND A SHORT TIME TO GET THERE' Jerry Ellig* & Hester Peirce INTRODUCTION The U.S. Securities and Exchange Commission (the SEC or Commission) regulates the U.S. securities markets. Its rules affect the participants in those markets, including retail investors and public companies. SEC rules are supposed to help protect investors, facilitate capital formation, and foster fair, orderly, and efficient markets. The SEC writes disclosure rules for public companies and oversees the activities of over 20,000 financial firms, including investment advisers, mutual funds and other exchange-traded funds, broker-dealers, national securities exchanges, credit-rating agencies, and a number of financial market utilities and quasi-governmental regulators. Given that SEC rules can have sweeping effects on the U.S. economy, the role of economic analysis in shaping those rules is crucial. Without an evidence-based assessment of the problem the Commission seeks to solve and the pros and cons of alternative solutions, the Commission would be flying blind. Recognizing this reality, Congress included in the SEC's authorizing legislation a requirement that the Commission conduct economic analysis when it determines whether new rules are in the public interest. Federal appeals courts have vacated several SEC rules due to inadequate economic analysis. The SEC, pledging to do better, published staff economic analysis guidance in March 2012 that covers many of the same topics executive branch agencies are expected to address in Regulatory Impact Analyses (RIAs) of major regulations. Considering the controversy generated by recent court cases, an evaluation of economic analysis in SEC regulations is highly timely. This Article critically examines the quality and use of economic analysis in seven major final rules promulgated by the SEC prior to the issuance of its March 2012 staff economic analysis guidance, as well as one major rule issued after the new guidance. We apply the Mercatus Center's Regulatory 1. JERRY REED, EAST BOUND AND DOWN (RCA Records 1977). * Senior Research Fellow, Mercatus Center at George Mason University. Ph.D., Economics, George Mason University, 1988; M.A., Economics, George Mason University, 1986; A.B., Economics, Xavier University, 1984. ** Senior Research Fellow, Mercatus Center at George Mason University. J.D., Yale Law School 1997, A.B., Economics, Case Western Reserve University, 1993. We gratefully acknowledge the assistance of Sherzod Abdukadirov, James Broughel, and Todd Nesbit, who evaluated the rules reviewed in this Article; the research assistance of Dima Yazji Shamoun and Robert Greene; the comments of the anonymous reviewers; the editing work of Ted Bolema; and the helpful guidance of Richard Williams.

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