Garrett Statements on Today's Actions by the SEC

Press Release

Rep. Scott Garrett (NJ-05), Chairman of the Financial Services Subcommittee on Capital Markets and Government-Sponsored Enterprises, issued the following statements after the Securities and Exchange Commission (SEC) today announced changes to their in-house administrative law panels and proposed rules for public company disclosure requirements. Garrett's subcommittee oversees the SEC, and he is the author of legislation dealing with both of these issues.

In-House Administrative Law Panels:

"While I appreciate the SEC acknowledging the serious due process concerns that have been raised because of their unfair use of in-house judges, the changes adopted today effectively put a Band-Aid on a wound that requires stitches," said Garrett. "This is an extremely modest step in the right direction, but defendants ultimately deserve a right to remove themselves from the SEC's tribunals so they can have their case heard in federal court, as prescribed by the Due Process Restoration Act. Until every American is promised that basic Constitutional right, we won't have real justice."

Background:

In the wake of the 2010 Dodd-Frank Act, which granted the SEC expanded administrative enforcement powers, the SEC started trying an increasing number of alleged wrongdoers before its in-house administrative panels rather than in the federal courts established by Article III of the Constitution. Garrett is a prominent critic of the SEC's use of in-house tribunals and is the author of the Due Process Restoration Act that would rein-in the SEC's controversial overuse of in-house administrative law judges and ensure that all Americans are given due process by allowing defendants the option of having their case heard before a federal court.

Disclosure Modernization:

"In a world of speed and efficiency, the rules governing disclosure requirements from U.S. companies have been stuck in the Stone Age," said Garrett. "I am pleased that the SEC is finally taking steps to meet statutory requirements to simplify and modernize our outdated disclosure regime. These proposals are a positive development for both businesses and investors that have been trapped for too long under a mountain of government-mandated paperwork that stifles our capital markets."

Background:

In December, President Obama signed the FAST Act which included Rep. Garrett's bill, the Disclosure Modernization and Simplification Act. This bill requires the SEC to take steps to modernize the current disclosure regime by eliminating any outdated or duplicative disclosure requirements and ensure that investors get the information they need to make informed decisions. After missing its June 1, 2016 deadline to propose a rule, Rep. Garrett called on SEC Chair Mary Jo White to propose rules to fulfil their Congressionally-mandated requirements immediately.

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