Wagner Delivers Opening Remarks at Hearing to Examine the Consequences of the SEC's Agenda for U.S. Capital Markets and Investors

Hearing

"Thank you for joining us today to examine the rulemaking process of the U.S. Securities and Exchange Commission ("SEC'), an institution central to upholding the integrity, transparency, and stability of our nation's capital markets. The United States boasts the world's deepest and most liquid capital markets, serving as the cornerstone of our economic growth and prosperity.

These markets are already among the most heavily regulated sectors in our economy. This underscores the need for our regulators to exercise the utmost diligence in their rulemaking activities. Interventions must narrowly address known market deficiencies without inadvertently causing harm or disruption, especially in times of economic stress and uncertainty.

Regulators should not use their position to experiment with academic pet projects. Transformative changes must be meticulously crafted and thoroughly vetted to account for indirect costs and cumulative effects, and only undertaken when explicitly authorized by Congress.

Regrettably, we have observed a departure from this approach under the current leadership of the SEC, led by Chair Gensler.

In recent months, our subcommittee has undertaken a rigorous examination of the SEC's actions. We've heard testimony from various SEC division directors, including those overseeing Investment Management, Corporation Finance, Trading and Markets, and Economic and Risk Analysis.

In these dialogues, we've raised serious bipartisan concerns regarding both the content and process of the Commission's rulemakings.

Today, I'd like to draw attention to the most concerning aspects of the SEC's present approach to rulemaking:

First, the SEC has embarked on an extraordinary pace of rulemaking since the spring of 2021, a pace that raises questions about the agency's ability to comprehensively evaluate the cumulative effects, indirect costs, and cross-market implications of these rules.

Chair Gensler's rush to implement his unprecedented rulemaking agenda is jeopardizing the health of our capital markets and the hard-earned dollars that millions of Americans have invested in them.

Second, the SEC has significantly curtailed public comment periods for proposed rules, at times even overlapping them with major holidays.

This inhibits affected investors and market participants from providing thorough feedback, and shortened comment periods deprive the SEC of the information they need to craft better, more surgical proposals.

I am going to enter into the record a record of nearly 20 rulemakings and proposals that have undergone less than 30-day comment periods, for the record, so that it is clear that this is happening.

Extending these comment periods is imperative to allow market participants ample time to assess and evaluate the potential implications of these rules.

Third, the SEC's apparent disregard for congressional concern and congressional inquiries undermines trust in the regulatory process and raises accountability questions."

"This is evident in bipartisan opposition to the SEC's approach to a number of issues, including MiFID II, equity market structure, swing pricing, and conflicts of interest.

"One of the most recent examples of this blatant disregard for congressional inquiries is in response to a letter that I sent in September along with Mr. Hill and 19 other Representatives and Senators regarding the Predictive Data Analytics proposal. It's been more than 30 days since we sent that letter, which posed specific questions to the SEC, questions that need timely responses. We received emails assuring us that the SEC would be following up with a response, but more than thirty days have passed, and still nothing.

"Finally, the hearings leading up to today made it clear the SEC is exceeding its mandate, particularly in areas related to environmental and social policies. It is our duty to ensure agencies adhere to their statutory authority and do not create far-reaching policies that Congress never intended.

"Today, we have the opportunity to explore these concerns, while shedding light on the potential consequences of the SEC's agenda and current approach to rulemaking.

"I look forward to hearing from our esteemed panel of experts as we delve deeper into these matters in order to promote sound financial regulation and safeguard our capital markets."

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