Title: H.R.8339: SEC Reform and Restructuring Act
On November 30, 2024, a bipartisan group of lawmakers introduced the SEC Reform and Restructuring Act (H.R.8339) to modernize and strengthen the Securities and Exchange Commission (SEC). The bill is led by Representatives Ann Wagner (R-MO) and Jake Auchincloss (D-MA).
The SEC is the primary regulator of the U.S. securities markets. It enforces federal securities laws and regulates companies that issue public securities and investment professionals.
This expansive reform bill would make significant changes to the SEC’s structure, rulemaking authority, and enforcement powers. Here are its key provisions:
- Restructuring the SEC:
The bill would restructure the SEC into three independent divisions:
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The Division of Enforcement would investigate and enforce violations of securities laws.
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The Division of Regulation would develop and implement regulations for the securities industry.
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The Division of Investor Protection would educate investors and provide assistance to victims of securities fraud.
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Expanding Rulemaking Authority:
The bill would expand the SEC’s rulemaking authority to include the ability to set rules on:
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Systemic risk: The SEC could regulate activities that pose a risk to the stability of the financial system.
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Market manipulation: The SEC could prohibit manipulative trading practices, such as spoofing and layering.
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Corporate governance: The SEC could mandate disclosure of executive compensation and other corporate governance practices.
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Enhancing Enforcement Powers:
The bill would enhance the SEC’s enforcement powers by:
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Increasing penalties for securities violations: The SEC could impose civil penalties of up to $10 million for individuals and $100 million for companies.
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Authorizing the SEC to seek disgorgement of ill-gotten gains: The SEC could require wrongdoers to return profits obtained through securities violations.
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Providing whistleblower protection: The SEC would be required to protect whistleblowers who report securities violations.
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Improving Transparency and Accountability:
The bill would improve transparency and accountability at the SEC by:
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Requiring the SEC to publish its rulemaking agenda: The SEC would be required to publish a list of proposed and pending rulemakings.
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Establishing a SEC Inspector General: The Inspector General would oversee the SEC’s operations and investigate allegations of misconduct.
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Requiring the SEC to report to Congress: The SEC would be required to submit annual reports to Congress on its activities and enforcement actions.
The SEC Reform and Restructuring Act is a comprehensive piece of legislation that would significantly reshape the SEC. The bill’s supporters argue that it is necessary to modernize the SEC and ensure that it has the tools it needs to protect investors and maintain the integrity of the securities markets. Opponents of the bill argue that it would give the SEC too much power and stifle innovation in the financial industry.
The bill is currently in the early stages of the legislative process. It has been referred to the House Committee on Financial Services, which will hold hearings and consider amendments before voting on the bill. If the bill is passed by the House, it will then move to the Senate for consideration.
H.R. 8339 (RH) – SEC Reform and Restructuring Act
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