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Essential IR Insights Newsletter - February 2023

SEC should return to 'forgotten' antitrust mandate, commissioner says

U.S. securities markets have become fertile grounds for monopolistic entities to grow, thanks in part to a lack of oversight from Wall Street's chief regulator, a top SEC official said.

In a forceful speech, SEC Commissioner Robert Jackson Jr. called for the creation of an "Office of Anti-Trust Economics" within the SEC's Division of Economic and Risk Analysis to help the agency salvage a "forgotten" part of its mission and congressional mandate to promote competition.

"Over the past two decades, the commission has stood by while power in our financial markets has become more concentrated than ever before," Jackson, a Democrat, said Oct. 11 at a Washington, D.C. conference. "It's time to bring competition economics back to the SEC."

Antitrust regulation in the U.S. largely falls on the shoulders of the Department of Justice and the Federal Trade Commission. But under the Securities Act of 1933, the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the SEC is required to consider whether any proposed rule changes will promote "efficiency, competition and capital formation," as well as whether a rule would protect investors.

Somewhere along the way, the SEC seemed to have "bizarrely" forgotten about the antitrust portion of its mission, Jackson said.

"We are fundamentally making a mistake if we assume that competition economics can be left to the FTC and the DOJ," he said. "Everyone has less choice today than they did decades ago when they seek advice from Wall Street."

Almost every industry that the SEC oversees has seen a concentration of power, Jackson said. He called out credit rating agencies, investment banks and stock exchanges as the worst offenders. The comments came three weeks after Jackson criticized certain stock exchange practices and the SEC's regulation of them.

In the speech, Jackson urged the agency to start considering competition when crafting rules and voting on proposals, adding that he has pressed SEC Chairman Jay Clayton to work more closely with the FTC to prevent antitrust economics.

"A fundamental fourth pillar of what we do has somehow ended up in the history books," Jackson said. "We at the SEC need to learn from that history or we'll be doomed to repeat the mistakes that led to the concentration of power that gave birth to the SEC in the first place."