The Costs of Mandatory Cost–Benefit Analysis in SEC Rulemaking

Cost–benefit analysis can be a valuable tool when deployed at the Securities and Exchange Commission’s discretion to improve its rulemaking process and the overall quality of SEC rules. However, when a cost–benefit analysis obligation is imposed externally–whether from an explicit statutory command or from a de facto requirement enforced through judicial review–the costs of that mandatory cost–benefit analysis can be quite substantial. This Article identifies and explores the qualitative costs that that have already been incurred, and are bound to continue, if the adequacy of the SEC’s cost–benefit analysis remains subject to extensive judicial scrutiny. These costs will only intensify if Congress amends the federal securities laws to add a host of new and onerous cost–benefit analysis requirements.