Professor Jennifer Taub submitted a written statement to the House Financial Services Committee making it clear that calling proposed legislation beneficial to the capital markets is not the same as doing it.
I believe that at least two of the legislative proposals you are considering will damage, not improve, the U.S. capital markets. Of particular concern are the Due Process Restoration Act (H.R. 3798) and the Fostering Innovation Act. These proposals may seem appealing on the surface. Like masterful marketing slogans for mediocre products, their titles and descriptions are designed to persuade but not fully inform. At first glance, sensible people would support both restoring due process and also fostering innovation. But, upon digging deeper into the details, they will note that due process has not been taken away from parties to SEC administrative hearings. And, depriving for a decade, shareholders of companies with between $75 million and $700 million in common stock of auditor attestations––related to internal control over financial reporting––will not foster innovation.
In other words, these bills are premised on imagined or exaggerated problems in order to slide through solutions that cause more harm than good. Misleading techniques of this type are known in the false advertising realm as “bait and switch” tactics. Similarly, these legislative proposals will not actually deliver as promised. Instead, they will weaken one of the central pillars of the U.S. capital markets, the protection of investors.