SEC Would Add Two Commissioners in U.S. Chamber Reform Plan

Dec. 13 (Bloomberg) -- The U.S. Securities and Exchange Commission needs a top-down restructuring that increases the number of commissioners and requires they be more specialized, according to a report from the U.S. Chamber of Commerce.

The SEC would expand to seven members including a deputy chairman for management and operations under proposals included in the 135-page “Roadmap for Transformational Reform,” released in Washington today by the Chamber’s Center for Capital Markets Competitiveness. The plan would overhaul an SEC “grounded in an outdated view of the world’s financial markets,” according to the report.

“The agency has been too late to the dance so often that one can no longer consider these aberrations,” Jonathan G. Katz, the former SEC secretary who wrote the report for the chamber, said in a conference call with reporters. “Tinkering and fine tuning is no longer the best strategy,” he said.

To expand expertise among commissioners, Katz’s report calls for a requirement that an accountant, an economist and an attorney be included on the seven-member panel. He also urges an expansion of investigative training in the enforcement unit and suggests that older cases “be closed routinely” to cut back the division’s backlog.

Enforcement “should have an explicit goal of bringing cases that advance the Commission’s entire regulatory agenda,” according to the report.

“At a minimum, we hope it’ll lead to a vigorous debate,” David Hirschmann, president and chief executive officer of the Center for Capital Markets Competitiveness, said of the report during the conference call. “The only unacceptable answer is the notion that no change is needed and money alone will solve the SEC’s problems.”

Republican Proposals

Congressional Republicans including Representative Spencer Bachus of Alabama, chairman of the House Financial Services Committee, have proposed legislation to overhaul the SEC after faulting the agency for missteps before the 2008 credit crisis. Bachus’s bill calls for consolidating offices and instituting spending limits, incorporating recommendations from the SEC’s inspector general, the Government Accountability Office and a consultant’s report required by the Dodd-Frank Act.

SEC Chairman Mary Schapiro has asked Congress to approve a $1.4 billion budget for 2012 as it implements new oversight duties under Dodd-Frank, the regulatory overhaul enacted in response to the 2008 crisis.

“The SEC has successfully implemented a number of major reforms and remains committed to additional improvements,” said John Nester, an agency spokesman, in response to the release of the Chamber’s report. The agency hasn’t yet reviewed its contents, Nester said.

The Center for Capital Markets Competitiveness is a Chamber of Commerce unit dedicated to maintaining and advancing U.S. global leadership by promoting “a modern and coherent financial services regulatory structure” and pushing back “on special interests and activists to promote long-term interests of all investors,” according to its Web site.

To contact the reporter on this story: Jesse Hamilton in Washington at jhamilton33@bloomberg.net.

To contact the editor responsible for this story: Lawrence Roberts at lroberts13@bloomberg.net.