A substantive restructuring. v2 significantly strengthens the direct integration of the Public Company Accounting Oversight Board's functions into the Securities and Exchange Commission by replacing references to a new "Office" with "the Commission" and clarifying that PCAOB rules become SEC rules. It also expands technical amendments to further remove PCAOB references and adds Commission approval for the standard-setting body's budget.
SEC Reform and Restructuring Act
- Sponsor
- Rep. Wagner, Ann [R-MO-2]
- Committees
- Financial Services Committee (primary)
- Last action
- Sep 3, 2026
Bottom line
The bill aims to streamline SEC operations, enhance regulatory accountability and transparency, and potentially reduce regulatory burdens on market participants by restructuring oversight and clarifying enforcement parameters.
What it actually does
This bill proposes significant reforms to the Securities and Exchange Commission (SEC) and related securities laws. Key changes include mandating enhanced cost-benefit analyses for SEC regulations, integrating the Public Company Accounting Oversight Board (PCAOB) into the SEC, requiring semiannual congressional testimony from the SEC Chairman, and clarifying how violations are counted for enforcement penalties. It also mandates GAO audits of SEC IT infrastructure and studies on major SEC rules, and sets minimum public comment periods for rulemaking.
Proponents argue
Proponents argue that the bill will lead to more efficient, data-driven, and accountable regulation by the SEC, reducing unnecessary compliance costs for businesses and fostering capital formation. They contend that integrating the PCAOB will streamline oversight, while enhanced cost-benefit analysis and public comment periods will result in better-tailored rules that achieve their objectives without undue burden.
Opponents contend
Opponents might contend that integrating the PCAOB into the SEC could compromise the independence of auditor oversight, potentially weakening investor protections established by Sarbanes-Oxley. They may also argue that increased procedural hurdles for rulemaking and clarified violation counting could slow down necessary regulatory responses and dilute the deterrent effect of SEC enforcement actions, ultimately harming investors.
The bill is moderately complex due to its extensive amendments to existing statutes and the restructuring of a key regulatory body, requiring careful reading to understand its full implications.
Title I, Sec. 101
Enhanced Cost-Benefit Analysis for SEC Regulations
This provision amends the Securities Exchange Act of 1934 to require the SEC to conduct rigorous cost-benefit analyses before proposing or issuing regulations. It mandates identifying the problem, assessing jurisdiction, utilizing the Chief Economist for quantitative and qualitative cost-benefit assessments (both individual and cumulative), and only issuing rules if benefits justify costs. It also requires post-adoption impact assessments for 'major rules' with specific metrics and reporting.
Supporters argue
Proponents argue this provision ensures that SEC regulations are data-driven, economically sound, and do not impose undue burdens on market participants, thereby fostering efficiency, competition, and capital formation. They believe it prevents regulatory overreach and ensures accountability for the real-world impact of rules.
Critics contend
Opponents might contend that these requirements could create bureaucratic hurdles, slow down necessary rulemaking, and potentially be used to justify inaction on critical investor protection issues by overemphasizing costs or understating qualitative benefits. They may argue it shifts the focus from investor protection to economic burden.
Tradeoffs
The provision navigates the tension between ensuring regulatory efficiency and minimizing compliance costs versus maintaining the SEC's agility and authority to implement timely and robust investor protection measures.
Title II, Sec. 201
Semiannual Congressional Testimony by SEC Chairman
This section amends the Securities Exchange Act of 1934 to require the Chairman of the Securities and Exchange Commission to testify before the House Financial Services Committee and the Senate Banking, Housing, and Urban Affairs Committee at least once every six months. Additionally, all Commissioners must join the Chairman for testimony at least once annually.
Title III, Sec. 301
GAO Audit of SEC Information Technology and Data Handling
This section mandates the Comptroller General of the United States (GAO) to conduct an independent audit of the SEC's information technology (IT) infrastructure and data handling within one year of the bill's enactment. The audit must compare SEC IT spending to other federal financial regulators, examine IT contracting quality, assess cybersecurity systems, and review any recent IT or data breaches. A report with findings and recommendations is to be submitted to the SEC and relevant congressional committees.
Title IV, Sec. 401
Consideration of Cumulative Effect of Regulations
This provision amends the Securities Act of 1933, Securities Exchange Act of 1934, Investment Company Act of 1940, and Investment Advisers Act of 1940. It requires the SEC, when making rules, to consider the cumulative effect of a proposed rule "with other related rules or regulations or other related and recent proposed rules or regulations" on efficiency, competition, and capital formation.
Title V, Sec. 501-511
Integration of Public Company Accounting Oversight Board (PCAOB) into SEC
This title repeals sections of the Sarbanes-Oxley Act of 2002 that established the independent PCAOB and transfers its functions to a new "Office of Public Accounting Oversight" within the SEC's Office of the Chief Accountant. The SEC's Chief Accountant will serve as the Director of this new office. All existing PCAOB rules will become SEC rules, and the SEC will assume responsibility for inspections, investigations, and disciplinary proceedings of registered public accounting firms. The full transfer and termination of the existing PCAOB will occur two years after enactment.
Title VI, Sec. 601
GAO Study Regarding Major SEC Rules
This section mandates the Government Accountability Office (GAO) to conduct a study every three years on major rules issued by the SEC. Each study must include a cost-benefit analysis of the rule, a comparison with the SEC's own analysis, a comparison of projected versus actual costs, and an evaluation of whether the rule facilitates capital formation, promotes fair markets, and protects investors. If more than 10 major rules are applicable, the GAO will review the 10 most significant ones.
Title VII, Sec. 701
Minimum Public Comment Period for Rulemaking
This section establishes a minimum public comment period for proposed SEC rulemakings. It requires a period of at least 60 days, or at least 30 days if the Commission determines the proposed rule addresses imminent investor harm. Federal holidays are explicitly excluded from the calculation, and the period begins on the date the proposed rule is published in the Federal Register.
Title VIII, Sec. 801
Clarification of Violation Counting for Penalties
This section amends various securities acts (Securities Act of 1933, Securities Exchange Act of 1934, Investment Company Act of 1940, and Investment Advisers Act of 1940) to clarify how violations are counted for penalty determination. It specifies that separate acts of noncompliance are considered a single violation if they result from a common or substantially overlapping originating cause, the same misstatement or omission, or a continuing failure to comply.
Title IX, Sec. 901
SEC Organizational Review and Reorganization
This section requires the SEC Chairman to conduct a review of the Commission's organizational structure within 180 days of enactment. Following the review, the Chairman must, within 90 days, reduce the number of offices and officials reporting directly to the Chairman by reassigning them within the organizational structure, to the extent practicable. A report detailing these changes and legislative recommendations is required. The bill also permits the SEC to consolidate its regional offices if deemed appropriate.
The actual termination of the Public Company Accounting Oversight Board (PCAOB) and the effective date for the transfer of its functions to the SEC's new Office of Public Accounting Oversight is two years after the date of the bill's enactment.
Title V, Sec. 501(c), (d) and Sec. 511
Why it matters:This is standard legislative practice for phased implementation of significant structural changes, allowing agencies sufficient time to prepare for the transition, integrate staff, and ensure continuity of operations without immediate disruption.
Case for: Provides a necessary and practical transition period for the SEC to absorb the PCAOB's functions, staff, and operational complexities, minimizing disruption to ongoing auditor oversight and regulatory activities.
Case against: Delays the intended streamlining and efficiency benefits of the PCAOB's integration into the SEC for two years, potentially creating a period of uncertainty for both the PCAOB and the SEC.
Estimated impact: A significant structural change to a key financial regulator, affecting thousands of public accounting firms and indirectly millions of investors, but with a delayed impact over a two-year transition period.
This section clarifies that nothing in Title V or its amendments shall invalidate or affect existing cooperative arrangements or agreements between the Public Company Accounting Oversight Board (PCAOB) and foreign auditor oversight authorities.
Title V, Sec. 509
Why it matters:This is standard legislative practice to ensure the legal continuity of international agreements and cooperative frameworks when a domestic agency undergoes significant restructuring, preventing unintended disruptions to global regulatory efforts.
Case for: Ensures the seamless continuation of vital international cooperation in auditor oversight, preventing disruption to cross-border regulatory efforts and maintaining stability in global financial markets during the transition of PCAOB functions.
Case against: No specific opposition is typically raised against such technical continuity provisions, as they are generally seen as necessary to avoid unintended negative consequences of legislative changes.
Estimated impact: Maintains existing international regulatory frameworks and relationships, avoiding potential diplomatic or regulatory gaps that could arise from the PCAOB's integration into the SEC.