IB 
Union Calendar No. 317 
112TH CONGRESS 
2D SESSION 
H. R. 2308 
[Report No. 112–453] 
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 
JUNE 23, 2011 
Mr. GARRETT (for himself, Mr. BACHUS, Mr. HENSARLING, Mr. NEUGE-
BAUER, Mr. JONES, Mr. MCHENRY, Mr. CONAWAY, Mr. KING of New 
York, Mr. CAMPBELL, Mr. SCHWEIKERT, Mr. STIVERS, Mr. DOLD, Mr. 
MANZULLO, Mr. HURT, Mr. CANSECO, and Mr. YODER) introduced the 
following bill; which was referred to the Committee on Financial Services 
APRIL 25, 2012 
Additional sponsors: Mr. GRIMM, Mr. HUIZENGA of Michigan, Mr. GARY G. 
MILLER of California, and Mr. BISHOP of Utah 
APRIL 25, 2012 
Reported with an amendment, committed to the Committee of the Whole 
House on the State of the Union, and ordered to be printed 
[Strike out all after the enacting clause and insert the part printed in italic] 
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A BILL 
To improve the consideration by the Securities and Exchange 
Commission of the costs and benefits of its regulations 
and orders. 
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Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled, 
SECTION 1. SHORT TITLE. 
This Act may be cited as the ‘‘SEC Regulatory Ac-
countability Act’’. 
SEC.
2.
CONSIDERATION
BY
THE
SECURITIES
AND
EX-
CHANGE COMMISSION OF THE COSTS AND 
BENEFITS
OF
ITS
REGULATIONS
AND
OR-
DERS. 
Section 23 of the Securities Exchange Act of 1934 
(15 U.S.C. 78w) is amended by adding at the end the fol-
lowing: 
‘‘(e) CONSIDERATION OF COSTS AND BENEFITS.— 
‘‘(1) IN GENERAL.—Before promulgating a reg-
ulation under the securities laws, as defined in sec-
tion 3(a), or issuing any order pursuant to such 
laws, the Commission shall— 
‘‘(A) clearly identify the nature of the 
problem that the proposed regulation is de-
signed to address, as well as assess the signifi-
cance of that problem, to enable assessment of 
whether any new regulation is warranted; 
‘‘(B) utilize the Office of the Chief Econo-
mist to assess the costs and benefits, both qual-
itative and quantitative, of the intended regula-
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tion or order and propose or adopt a regulation 
or order only on a reasoned determination that 
the benefits of the intended regulation or order 
justify the costs of the intended regulation or 
order; and 
‘‘(C) ensure that any regulation or order is 
accessible, consistent, written in plain language, 
and easy to understand and shall measure, and 
seek to improve, the actual results of regulatory 
requirements. 
‘‘(2) CONSIDERATIONS.—In deciding whether 
and how to regulate, the Commission shall assess 
the costs and benefits of available regulatory alter-
natives, including the alternative of not regulating. 
In addition, the Commission may also take the fol-
lowing actions in making a reasoned determination 
of the costs and benefits of a potential regulation— 
‘‘(A) assess the best ways of protecting 
market participants and the public; 
‘‘(B)
take
into
consideration
investor 
choice; 
‘‘(C) consider the impact on capital forma-
tion; 
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‘‘(D) evaluate the effect on the efficiency, 
competitiveness, and financial integrity of secu-
rities markets; 
‘‘(E) consider the impact on market liquid-
ity in the securities markets; 
‘‘(F) take into consideration price dis-
covery; 
‘‘(G)
evaluate
sound
risk
management 
practices; 
‘‘(H) evaluate the degree and nature of the 
risks posed by various activities within the 
scope of its jurisdiction; 
‘‘(I) determine whether, consistent with ob-
taining regulatory objectives, the regulation is 
tailored to impose the least burden on society, 
including market participants, individuals, busi-
nesses of differing sizes, and other entities (in-
cluding State and local governmental entities), 
taking into account, to the extent practicable, 
the cumulative costs of regulations; 
‘‘(J) determine whether the regulation is 
inconsistent,
incompatible,
or
duplicative
of 
other Federal regulations; and 
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‘‘(K)
determine
whether,
in
choosing 
among alternative regulatory approaches, those 
approaches maximize net benefits. 
‘‘(3) REVIEW
OF
EXISTING
REGULATIONS.— 
The Commission shall periodically review its regula-
tions and orders in effect before the date of enact-
ment of this subsection to determine whether any 
such regulations or orders are outmoded, ineffective, 
insufficient, or excessively burdensome, and shall 
modify, streamline, expand, or repeal them in ac-
cordance with such review.’’. 
SECTION 1. SHORT TITLE. 
This Act may be cited as the ‘‘SEC Regulatory Ac-
countability Act’’. 
SEC. 2. CONSIDERATION BY THE SECURITIES AND EX-
CHANGE COMMISSION OF THE COSTS AND 
BENEFITS OF ITS REGULATIONS AND CER-
TAIN OTHER AGENCY ACTIONS. 
Section 23 of the Securities Exchange Act of 1934 (15 
U.S.C. 78w) is amended by adding at the end the following: 
‘‘(e) CONSIDERATION OF COSTS AND BENEFITS.— 
‘‘(1) IN GENERAL.—Before issuing a regulation 
under the securities laws, as defined in section 3(a), 
the Commission shall— 
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‘‘(A) clearly identify the nature and source 
of the problem that the proposed regulation is de-
signed to address, as well as assess the signifi-
cance of that problem, to enable assessment of 
whether any new regulation is warranted; 
‘‘(B) utilize the Chief Economist to assess 
the costs and benefits, both qualitative and quan-
titative, of the intended regulation and propose 
or adopt a regulation only on a reasoned deter-
mination that the benefits of the intended regula-
tion justify the costs of the regulation; 
‘‘(C) identify and assess available alter-
natives to the regulation that were considered, 
including modification of an existing regulation, 
together with an explanation of why the regula-
tion meets the regulatory objectives more effec-
tively than the alternatives; and 
‘‘(D) ensure that any regulation is acces-
sible, consistent, written in plain language, and 
easy to understand and shall measure, and seek 
to improve, the actual results of regulatory re-
quirements. 
‘‘(2) CONSIDERATIONS AND ACTIONS.— 
‘‘(A) REQUIRED
ACTIONS.—In deciding 
whether and how to regulate, the Commission 
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shall assess the costs and benefits of available 
regulatory alternatives, including the alternative 
of not regulating, and choose the approach that 
maximizes net benefits. Specifically, the Commis-
sion shall— 
‘‘(i) consistent with the requirements of 
section 3(f) (15 U.S.C. 78c(f)), section 2(b) 
of the Securities Act of 1933 (15 U.S.C. 
77b(b)), section 202(c) of the Investment 
Advisers Act of 1940 (15 U.S.C. 80b–2(c)), 
and section 2(c) of the Investment Company 
Act of 1940 (15 U.S.C. 80a–2(c)), consider 
whether the rulemaking will promote effi-
ciency, competition, and capital formation; 
‘‘(ii) evaluate whether, consistent with 
obtaining regulatory objectives, the regula-
tion is tailored to impose the least burden 
on society, including market participants, 
individuals, businesses of differing sizes, 
and other entities (including State and 
local governmental entities), taking into ac-
count, to the extent practicable, the cumu-
lative costs of regulations; and 
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‘‘(iii) evaluate whether the regulation 
is inconsistent, incompatible, or duplicative 
of other Federal regulations. 
‘‘(B) 
ADDITIONAL
CONSIDERATIONS.—In 
addition, in making a reasoned determination of 
the costs and benefits of a potential regulation, 
the Commission shall, to the extent that each is 
relevant to the particular proposed regulation, 
take into consideration the impact of the regula-
tion on— 
‘‘(i) investor choice; 
‘‘(ii) market liquidity in the securities 
markets; and 
‘‘(iii) small businesses 
‘‘(3) EXPLANATION AND COMMENTS.—The Com-
mission shall explain in its final rule the nature of 
comments that it received, including those from the 
industry or consumer groups concerning the potential 
costs or benefits of the proposed rule or proposed rule 
change, and shall provide a response to those com-
ments in its final rule, including an explanation of 
any changes that were made in response to those com-
ments and the reasons that the Commission did not 
incorporate those industry group concerns related to 
the potential costs or benefits in the final rule. 
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‘‘(4) REVIEW OF EXISTING REGULATIONS.—Not 
later than 1 year after the date of enactment of the 
SEC Regulatory Accountability Act, and every 5 
years thereafter, the Commission shall review its regu-
lations to determine whether any such regulations are 
outmoded, ineffective, insufficient, or excessively bur-
densome, and shall modify, streamline, expand, or re-
peal them in accordance with such review. 
‘‘(5) POST-ADOPTION IMPACT ASSESSMENT.— 
‘‘(A) IN GENERAL.—Whenever the Commis-
sion adopts or amends a regulation designated 
as a ‘major rule’ within the meaning of section 
804(2) of title 5, United States Code, it shall 
state, in its adopting release, the following: 
‘‘(i) The purposes and intended con-
sequences of the regulation. 
‘‘(ii) Appropriate post-implementation 
quantitative and qualitative metrics to 
measure the economic impact of the regula-
tion and to measure the extent to which the 
regulation has accomplished the stated pur-
poses. 
‘‘(iii) The assessment plan that will be 
used, consistent with the requirements of 
subparagraph (B) and under the super-
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vision of the Chief Economist of the Com-
mission, to assess whether the regulation has 
achieved the stated purposes. 
‘‘(iv) Any unintended or negative con-
sequences that the Commission foresees may 
result from the regulation. 
‘‘(B) REQUIREMENTS OF ASSESSMENT PLAN 
AND REPORT.— 
‘‘(i) REQUIREMENTS
OF
PLAN.—The 
assessment plan required under this para-
graph shall consider the costs, benefits, and 
intended and unintended consequences of 
the regulation. The plan shall specify the 
data to be collected, the methods for collec-
tion and analysis of the data and a date for 
completion of the assessment. 
‘‘(ii) SUBMISSION
AND
PUBLICATION 
OF
REPORT.—The Chief Economist shall 
submit the completed assessment report to 
the Commission no later than 2 years after 
the publication of the adopting release, un-
less the Commission, at the request of the 
Chief Economist, has published at least 90 
days before such date a notice in the Fed-
eral Register extending the date and pro-
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viding specific reasons why an extension is 
necessary. Within 7 days after submission 
to the Commission of the final assessment 
report, it shall be published in the Federal 
Register for notice and comment. Any mate-
rial modification of the plan, as necessary 
to assess unforeseen aspects or consequences 
of the regulation, shall be promptly pub-
lished in the Federal Register for notice and 
comment. 
‘‘(iii) DATA COLLECTION NOT SUBJECT 
TO
NOTICE
AND
COMMENT
REQUIRE-
MENTS.—If the Commission has published 
its assessment plan for notice and comment, 
specifying the data to be collected and meth-
od of collection, at least 30 days prior to 
adoption of a final regulation or amend-
ment, such collection of data shall not be 
subject to the notice and comment require-
ments in section 3506(c) of title 44, United 
States Code (commonly referred to as the 
Paperwork Reduction Act). Any material 
modifications of the plan that require collec-
tion of data not previously published for no-
tice and comment shall also be exempt from 
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such requirements if the Commission has 
published notice for comment in the Federal 
Register of the additional data to be col-
lected, at least 30 days prior to initiation 
of data collection. 
‘‘(iv) FINAL ACTION.—Not later than 
180 days after publication of the assessment 
report in the Federal Register, the Commis-
sion shall issue for notice and comment a 
proposal to amend or rescind the regulation, 
or publish a notice that the Commission has 
determined that no action will be taken on 
the regulation. Such a notice will be deemed 
a final agency action. 
‘‘(6) COVERED REGULATIONS AND OTHER AGEN-
CY ACTIONS.—Solely as used in this subsection, the 
term ‘regulation’— 
‘‘(A) means an agency statement of general 
applicability and future effect that is designed to 
implement, interpret, or prescribe law or policy 
or to describe the procedure or practice require-
ments of an agency, including rules, orders of 
general applicability, interpretive releases, and 
other statements of general applicability that the 
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agency intends to have the force and effect of 
law; and 
‘‘(B) does not include— 
‘‘(i) a regulation issued in accordance 
with the formal rulemaking provisions of 
section 556 or 557 of title 5, United States 
Code; 
‘‘(ii) a regulation that is limited to 
agency organization, management, or per-
sonnel matters; 
‘‘(iii) a regulation promulgated pursu-
ant to statutory authority that expressly 
prohibits compliance with this provision; 
and 
‘‘(iv) a regulation that is certified by 
the agency to be an emergency action, if 
such certification is published in the Fed-
eral Register.’’. 
SEC. 3. SUBMISSION OF PLAN FOR SUBJECTING OTHER 
REGULATORY ENTITIES TO COST AND BEN-
EFIT REQUIREMENTS. 
Not later than 1 year after the date of enactment of 
this Act, the Securities and Exchange Commission shall 
provide to the Committee on Financial Services of the 
House of Representatives and the Committee on Banking, 
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Housing, and Urban Affairs of the Senate a report setting 
forth a plan for subjecting the Public Company Accounting 
Oversight Board, the Municipal Securities Rulemaking 
Board, and any national securities association registered 
under section 15A of the Securities Exchange Act of 1934 
(15 U.S.C. 78o–4(a)) to the requirements subsection (e) of 
section 23 of such Act, as added by this Act. 
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Union Calendar No. 317 
112TH CONGRESS 
2D SESSION 
H. R. 2308 
[Report No. 112–453] 
A BILL 
To improve the consideration by the Securities and 
Exchange Commission of the costs and benefits 
of its regulations and orders. 
APRIL 25, 2012 
Reported with an amendment, committed to the Com-
mittee of the Whole House on the State of the Union, 
and ordered to be printed 
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