Commissioner Uyeda Urges SEC to Improve Rulemaking Process

SEC Commissioner Mark T. Uyeda identified areas for improvement in the SEC's approach to rulemaking.

In remarks before the Practising Law Institute's 55th Annual Institute on Securities Regulation, Commissioner Uyeda highlighted the importance of identifying the problem that the SEC is trying to solve at the outset of any rulemaking. He argued that the SEC should critically analyze the costs of disclosing additional information and the reasons why investors are requesting this information. He asserted that the SEC should not require disclosures for the purpose of trying to effect social change; rather, the agency's focus should be on the economics of ownership.

Commissioner Uyeda also criticized the SEC for failing to re-propose a rule when significant changes were made to the original proposal. Further, he pointed out that the SEC does not always appropriately scale the application of rules based on a company's size and maturity. He proposed that the SEC consider further scaling for other public companies, creating a new "middle class" of companies that are subject to many, but not all, of the SEC's disclosure requirements.

Commissioner Uyeda argued that the SEC should assess the cumulative costs of all rules, rather than considering each rule in isolation. He noted that the SEC's estimates of additional hours and costs imposed by new rules are likely to be much higher than originally estimated.