WASHINGTON, D.C.-The U.S. Chamber of Commerce today urged Congress and the SEC to address the challenges to the competitiveness of U.S. capital markets. The call came as the House Committee on Financial Services met to discuss the role of the SEC in investor protection and market oversight.
“A broken securities class action lawsuit system and an unpredictable and inefficient regulatory system have created a drag on the competitiveness of our capital markets,” said Tom Donohue, Chamber president and CEO. “Some of the best minds in the country have provided a road map for addressing this challenge-now U.S. policy-makers need to use it. Congress and the SEC must play their part in fixing these problems.
“Securities litigation abuse and an outdated regulatory structure don’t protect investors, they simply make lawyers rich. Shareholders who hold stock in a company at the time of legal judgment or settlement end up paying the shareholders who brought the lawsuit. As the broken system transfers wealth from one group of investors to another, it is the lawyers-both plaintiffs’ and defense-who benefit the most,” said Donohue.
According to the Chamber, the SEC is better suited to protect investors and foster capital formation than the current system that relies too heavily on private lawsuits. In the last two years, the SEC has increased the number of investigations, increased the fines and penalties collected from violators to be returned to injured investors, and boosted the number of requests for injunctive relief to halt fraud.
“It is essential that the SEC make its regulation and enforcement activities more efficient and more effective, shutting down wrongdoers without unduly burdening businesses, especially smaller businesses,” Donohue said.
The U.S. Chamber of Commerce is the world’s largest business federation representing more than 3 million businesses and organizations of every size, sector, and region. www.uschamber.com