I 

115TH CONGRESS 

1ST SESSION H. R. 78 

To improve the consideration by the Securities and Exchange Commission 

of the costs and benefits of its regulations and orders. 

IN THE HOUSE OF REPRESENTATIVES 

JANUARY 3, 2017 

Mrs. WAGNER introduced the following bill; which was referred to the 

Committee on Financial Services 

A BILL 

To improve the consideration by the Securities and Exchange 

Commission of the costs and benefits of its regulations 

and orders. 

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘SEC Regulatory Ac5 countability Act’’. 


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1 SEC. 2. CONSIDERATION BY THE SECURITIES AND EX2 CHANGE COMMISSION OF THE COSTS AND 

3 BENEFITS OF ITS REGULATIONS AND CER4 TAIN OTHER AGENCY ACTIONS. 

5 Section 23 of the Securities Exchange Act of 1934 

6 (15 U.S.C. 78w) is amended by adding at the end the fol7 lowing: 

8 ‘‘(e) CONSIDERATION OF COSTS AND BENEFITS.— 

9 ‘‘(1) IN GENERAL.—Before issuing a regulation 

10 under the securities laws, as defined in section 3(a), 

11 the Commission shall— 

12 ‘‘(A) clearly identify the nature and source 

13 of the problem that the proposed regulation is 

14 designed to address, as well as assess the sig15 nificance of that problem, to enable assessment 

16 of whether any new regulation is warranted; 

17 ‘‘(B) utilize the Chief Economist to assess 

18 the costs and benefits, both qualitative and 

19 quantitative, of the intended regulation and 

20 propose or adopt a regulation only on a rea21 soned determination that the benefits of the in22 tended regulation justify the costs of the regula23 tion; 

24 ‘‘(C) identify and assess available alter25 natives to the regulation that were considered, 

26 including modification of an existing regulation, 


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1 together with an explanation of why the regula2 tion meets the regulatory objectives more effec3 tively than the alternatives; and 

4 ‘‘(D) ensure that any regulation is acces5 sible, consistent, written in plain language, and 

6 easy to understand and shall measure, and seek 

7 to improve, the actual results of regulatory re8 quirements. 

9 ‘‘(2) CONSIDERATIONS AND ACTIONS.— 

10 ‘‘(A) REQUIRED ACTIONS.—In deciding 

11 whether and how to regulate, the Commission 

12 shall assess the costs and benefits of available 

13 regulatory alternatives, including the alternative 

14 of not regulating, and choose the approach that 

15 maximizes net benefits. Specifically, the Com16 mission shall— 

17 ‘‘(i) consistent with the requirements 

18 of section 3(f) (15 U.S.C. 78c(f)), section 

19 2(b) of the Securities Act of 1933 (15 

20 U.S.C. 77b(b)), section 202(c) of the In21 vestment Advisers Act of 1940 (15 U.S.C. 

22 80b–2(c)), and section 2(c) of the Invest23 ment Company Act of 1940 (15 U.S.C. 

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1 making will promote efficiency, competi2 tion, and capital formation; 

3 ‘‘(ii) evaluate whether, consistent with 

4 obtaining regulatory objectives, the regula5 tion is tailored to impose the least burden 

6 on society, including market participants, 

7 individuals, businesses of differing sizes, 

8 and other entities (including State and 

9 local governmental entities), taking into ac10 count, to the extent practicable, the cumu11 lative costs of regulations; and 

12 ‘‘(iii) evaluate whether the regulation 

13 is inconsistent, incompatible, or duplicative 

14 of other Federal regulations. 

15 ‘‘(B) ADDITIONAL CONSIDERATIONS.—In 

16 addition, in making a reasoned determination of 

17 the costs and benefits of a potential regulation, 

18 the Commission shall, to the extent that each is 

19 relevant to the particular proposed regulation, 

20 take into consideration the impact of the regu21 lation on— 

22 ‘‘(i) investor choice; 

23 ‘‘(ii) market liquidity in the securities 

24 markets; and 

25 ‘‘(iii) small businesses. 


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1 ‘‘(3) EXPLANATION AND COMMENTS.—The 

2 Commission shall explain in its final rule the nature 

3 of comments that it received, including those from 

4 the industry or consumer groups concerning the po5 tential costs or benefits of the proposed rule or pro6 posed rule change, and shall provide a response to 

7 those comments in its final rule, including an expla8 nation of any changes that were made in response 

9 to those comments and the reasons that the Com10 mission did not incorporate those industry group 

11 concerns related to the potential costs or benefits in 

12 the final rule. 

13 ‘‘(4) REVIEW OF EXISTING REGULATIONS.—Not 

14 later than 1 year after the date of enactment of the 

15 SEC Regulatory Accountability Act, and every 5 

16 years thereafter, the Commission shall review its 

17 regulations to determine whether any such regula18 tions are outmoded, ineffective, insufficient, or ex19 cessively burdensome, and shall modify, streamline, 

20 expand, or repeal them in accordance with such re21 view. In reviewing any regulation (including, not22 withstanding paragraph (6), a regulation issued in 

23 accordance with formal rulemaking provisions) that 

24 subjects issuers with a public float of $250,000,000 

25 or less to the attestation and reporting requirements 


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1 of section 404(b) of the Sarbanes-Oxley Act of 2002 

2 (15 U.S.C. 7262(b)), the Commission shall specifi3 cally take into account the large burden of such reg4 ulation when compared to the benefit of such regula5 tion. 

6 ‘‘(5) POST-ADOPTION IMPACT ASSESSMENT.— 

7 ‘‘(A) IN GENERAL.—Whenever the Com8 mission adopts or amends a regulation des9 ignated as a ‘major rule’ within the meaning of 

10 section 804(2) of title 5, United States Code, it 

11 shall state, in its adopting release, the fol12 lowing: 

13 ‘‘(i) The purposes and intended con14 sequences of the regulation. 

15 ‘‘(ii) Appropriate post-implementation 

16 quantitative and qualitative metrics to 

17 measure the economic impact of the regu18 lation and to measure the extent to which 

19 the regulation has accomplished the stated 

20 purposes. 

21 ‘‘(iii) The assessment plan that will be 

22 used, consistent with the requirements of 

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1 mission, to assess whether the regulation 

2 has achieved the stated purposes. 

3 ‘‘(iv) Any unintended or negative con4 sequences that the Commission foresees 

5 may result from the regulation. 

6 ‘‘(B) REQUIREMENTS OF ASSESSMENT

7 PLAN AND REPORT.— 

8 ‘‘(i) REQUIREMENTS OF PLAN.—The 

9 assessment plan required under this para10 graph shall consider the costs, benefits, 

11 and intended and unintended consequences 

12 of the regulation. The plan shall specify 

13 the data to be collected, the methods for 

14 collection and analysis of the data and a 

15 date for completion of the assessment. The 

16 assessment plan shall include an analysis 

17 of any jobs added or lost as a result of the 

18 regulation, differentiating between public 

19 and private sector jobs. 

20 ‘‘(ii) SUBMISSION AND PUBLICATION

21 OF REPORT.—The Chief Economist shall 

22 submit the completed assessment report to 

23 the Commission no later than 2 years after 

24 the publication of the adopting release, un25 less the Commission, at the request of the 


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1 Chief Economist, has published at least 90 

2 days before such date a notice in the Fed3 eral Register extending the date and pro4 viding specific reasons why an extension is 

5 necessary. Within 7 days after submission 

6 to the Commission of the final assessment 

7 report, it shall be published in the Federal 

8 Register for notice and comment. Any ma9 terial modification of the plan, as nec10 essary to assess unforeseen aspects or con11 sequences of the regulation, shall be 

12 promptly published in the Federal Register 

13 for notice and comment. 

14 ‘‘(iii) DATA COLLECTION NOT SUB15 JECT TO NOTICE AND COMMENT REQUIRE16 MENTS.—If the Commission has published 

17 its assessment plan for notice and com18 ment, specifying the data to be collected 

19 and method of collection, at least 30 days 

20 prior to adoption of a final regulation or 

21 amendment, such collection of data shall 

22 not be subject to the notice and comment 

23 requirements in section 3506(c) of title 44, 

24 United States Code (commonly referred to 

25 as the Paperwork Reduction Act). Any maVerDate Sep 11 2014 05:54 Jan 04, 2017 Jkt 069200 PO 00000 Frm 00008 Fmt 6652 Sfmt 6201 E:\BILLS\H78.IH H78

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1 terial modifications of the plan that require 

2 collection of data not previously published 

3 for notice and comment shall also be ex4 empt from such requirements if the Com5 mission has published notice for comment 

6 in the Federal Register of the additional 

7 data to be collected, at least 30 days prior 

8 to initiation of data collection. 

9 ‘‘(iv) FINAL ACTION.—Not later than 

10 180 days after publication of the assess11 ment report in the Federal Register, the 

12 Commission shall issue for notice and com13 ment a proposal to amend or rescind the 

14 regulation, or publish a notice that the 

15 Commission has determined that no action 

16 will be taken on the regulation. Such a no17 tice will be deemed a final agency action. 

18 ‘‘(6) COVERED REGULATIONS AND OTHER

19 AGENCY ACTIONS.—Solely as used in this subsection, 

20 the term ‘regulation’— 

21 ‘‘(A) means an agency statement of gen22 eral applicability and future effect that is de23 signed to implement, interpret, or prescribe law 

24 or policy or to describe the procedure or prac25 tice requirements of an agency, including rules, 


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1 orders of general applicability, interpretive re2 leases, and other statements of general applica3 bility that the agency intends to have the force 

4 and effect of law; and 

5 ‘‘(B) does not include— 

6 ‘‘(i) a regulation issued in accordance 

7 with the formal rulemaking provisions of 

8 section 556 or 557 of title 5, United States 

9 Code; 

10 ‘‘(ii) a regulation that is limited to 

11 agency organization, management, or per12 sonnel matters; 

13 ‘‘(iii) a regulation promulgated pursu14 ant to statutory authority that expressly 

15 prohibits compliance with this provision; 

16 and 

17 ‘‘(iv) a regulation that is certified by 

18 the agency to be an emergency action, if 

19 such certification is published in the Fed20 eral Register.’’. 

21 SEC. 3. SENSE OF CONGRESS RELATING TO OTHER REGU22 LATORY ENTITIES. 

23 It is the sense of the Congress that the Public Com24 pany Accounting Oversight Board should also follow the 


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1 requirements of section 23(e) of such Act, as added by 

2 this title. 

3 SEC. 4. ACCOUNTABILITY PROVISION RELATING TO OTHER 

4 REGULATORY ENTITIES. 

5 A rule adopted by the Municipal Securities Rule6 making Board or any national securities association reg7 istered under section 15A of the Securities Exchange Act 

8 of 1934 (15 U.S.C. 78o–3) shall not take effect unless 

9 the Securities and Exchange Commission determines that, 

10 in adopting such rule, the Board or association has com11 plied with the requirements of section 23(e) of such Act, 

12 as added by section 2, in the same manner as is required 

13 by the Commission under such section 23(e). 

Æ 


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