WASHINGTON, DC (Reuters) – In his final act before departing the Securities and Exchange Commission on Friday, the agency’s inspector general, David Kotz, criticized how the agency analyzes the economic impact of some of its Dodd-Frank rules.
Kotz’s criticism, contained in a report, could have ramifications for the SEC, which has lost several court battles over the years because of flaws in how it demonstrates that the benefits of a rule outweigh its costs.
“We found that the extent of quantitative discussion of cost-benefit analyses varied among rulemakings,” Kotz wrote in his report. “Based on our examination of several Dodd-Frank Act rulemakings, the review found that the SEC sometimes used multiple baselines in its cost-benefit analyses that were ambiguous or internally inconsistent.”
Last year, U.S. business groups successfully convinced a federal appeals court to overturn one of the SEC’s Dodd-Frank rules that aimed to empower shareholders to more easily nominate directors to corporate boards.
In rejecting the rule, the court said the agency failed to properly weigh the economic consequences.
Some of the business groups, such as the U.S. Chamber of Commerce, have since raised similar concerns with other rulemakings pending before the SEC.
Congress passed the Dodd-Frank act in 2010 to more closely police financial
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