The full text of this paper is available for download here as an Adobe Acrobat PDF file.

Executive Summary

Since the adoption of the National Securities Market Improvement Act (NSMIA) in 1996, the Commission has been required by statute to consider, in addition to the protection of investors, whether its action will promote efficiency, competition and capital formation. The Commission has largely ignored this statutory obligation, preferring to describe its mission solely as the protection of investors. Specifically citing the NSMIA language, the Court of Appeals for the DC Circuit recently remanded the independent chairman rule because the Commission failed to consider the economic effect of the rule on the mutual fund industry. This paper explores important areas of the Commission’s jurisdiction where attention to its statutory obligations would produce more balanced policies in the future.

Peter J. Wallison is a resident fellow at AEI.