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SEC improperly conducted cost-benefit analysis for Dodd-Frank

A ruling from the U.S. Court of Appeals for the D.C. Circuit Court determined that the Securities and Exchange Commission improperly conducted a cost-benefit analysis before finalizing a proxy rule required by Dodd-Frank.

The ruling will likely cause the delay of dozens of pending Dodd-Frank Act regulations and may convince regulators to take more time to ensure they can adequately justify their rules.

The case was brought by the U.S. Chamber of Commerce and Business Roundtable, which accused the SEC of not taking into account full costs associated with a new proxy rule, BankInvestmentConsultant.com reports.

Justice Douglas Ginsburg sided with the plaintiffs, saying that the SEC had acted “arbitrarily and capriciously” and failed to adequately assess the economic impact of its rule.

Republicans have seized the ruling as an opportunity to argue that the new regulations are expensive and burdensome to banks and the economy.

“Regulators charged with implementing the hundreds of Dodd-Frank rules must take this decision as a wakeup call and take the necessary time to get the final rules right by incorporating the meaningful public comments and economic analysis in their proposed rules,” Sen. Mike Crapo (R-Idaho) said.

The SEC is required to show a rule’s effect on efficiency, competition and capital formation. It previously lost a case on the same grounds, BankInvestmentConsultant.com reports.

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