by Hester Peirce, Jerry Ellig
Mercatus Center
April 03, 2014
Working Paper Series
The Securities and Exchange Commission (SEC), which oversees activities in US financial markets, is charged by Congress with formulating rules to protect investors and the general public by facilitating capital formation and fostering fair, orderly, and efficient markets. The role of economic analysis in shaping those rules is crucial in view of their impact on the US economy, as Congress recognized when it required the SEC to conduct economic analysis in making its determination whether new rules are in the public interest. This new study finds significant shortcomings in the SEC’s use of economic analysis in seven major final rules promulgated by the SEC before the issuance of its March 2012 staff economic analysis guidance and one major rule issued after the new guidance. As the SEC’s retooled regulatory analysis takes hold and the SEC applies it more, there is reason to be optimistic that SEC analysis will improve.

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