Hagerty, Tillis Seek GAO Opinion on Whether SEC Letter Enacting Policy Change is Subject to the Congressional Review Act

October 12, 2022

NASHVILLE, TN— United States Senator Bill Hagerty (R-TN), a member of the Senate Banking Committee, along with Senator Thom Tillis (R-NC), today sent a letter to Comptroller General of the United States Gene Dodaro, who heads the Government Accountability Office (GAO), seeking an opinion regarding whether the Congressional Review Act (CRA) applies to the Securities and Exchange Commission’s (SEC) December 2021 no-action letter, which improperly enacted a significant policy change outside of the traditional rulemaking process that requires transparency and public input. The Senators noted that this letter is yet another instance of the SEC attempting to avoid scrutiny and accountability for significant policy changes that affect millions of Americans.

“It is our view that the SEC’s December 16, 2021 no-action letter changing the application of Rule 15c2-11, with its related impact on Rule 144A, is a rule under the CRA. Because this no-action letter is currently causing significant consequences for broker-dealers, investors, and issuers in the Rule 144A market, we respectfully request that you provide your opinion by December 31, 2022, regardless of whether the opinion’s issuance would occur during a congressional recess,” the Senators wrote.

The CRA allows Congress to oversee the federal regulatory process for implementing legislation by allowing it to revoke, through a resolution of disapproval, certain rules that substantively affect the American people. When an agency fails to submit to Congress a policy that constitutes a rule under the CRA, a member of Congress may request that GAO issue an opinion regarding whether the rule should have been submitted to Congress. If GAO finds that the policy should have been submitted to Congress because it constitutes a rule, then such rule can be brought before Congress for a vote under expedited procedures.

A copy of the letter to General Dodaro can be found here