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SEC’s Mission Has Evolved Over Time, says Commissioner


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Congress has obliged the Securities and Exchange Commission to wear a number of hats over its 80-year history, but its primary mission today is to allow business to raise funds in ways that benefit the overall economy. 

“I think that capital formation is hugely important and the most critically important part of the SEC’s mission,” said Daniel M. Gallagher, a 1999 alumnus of Catholic University’s law school and one of two Republicans currently serving among the five commissioners that guide the SEC.
Gallagher was invited to speak about “Recent Developments at the SEC” on Sept. 29 by the Columbus School of Law’s Securities Law Program. Directed by Professor David A. Lipton, the program conducts an annual series of talks by distinguished practitioners and regulators regarding current issues in securities law.
Gallagher spent more than an hour giving a broad overview of the agency’s history, with particular emphasis on significant legislative changes to its mission over recent years that allow emerging growth companies to raise public funds.
Established in 1934, the SEC’s original charge was simply to protect investors from fraud. As time went on enforcement duties were added, giving the agency a “tough cop on the beat” image, said Gallagher.
“We’ve evolved from a disclosure agency to an enforcement agency in the minds of many,” he noted.
The National Securities Markets Improvement Act of 1996 brought further change to the SEC, tasking it with promoting efficiency and capital formation in the financial markets, more efficient management of mutual funds, and providing less burdensome regulation between states and the federal government.
As the agency works to meet these goals, helpful tools have developed in recent years that assist its mission. One is “crowdfunding,” the soon-to-be-implemented practice of funding a project or venture by raising monetary contributions from a large number of people via the internet. Gallagher is a fan of the populist method of raising money and predicted it will grow in importance.
He also discussed his support for other changes introduced by the JOBS Act of 2012, which requires the SEC to write rules and issue studies on capital formation, disclosure and registration requirements. Gallagher called the measure “the most deregulatory law we will see in our lifetimes.” But, he observed that by eliminating some regulations, the commission was compelled to introduce lengthy new regulations.
Gallagher was confirmed by the United States Senate as a commissioner of the Securities and Exchange Commission in 2011 after serving the agency in a number of other capacities earlier in his career.