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US senators suggest acting SEC chairman is overreaching his authority

In a sign of disquiet about the acting chair of the US Securities and Exchange Commission (SEC), Michael Piwowar, Democratic Senators have suggested that he has overreached his authority in a letter to the regulator’s inspector general, Carl Hoecker.

The Senators point out that Piwowar’s position is temporary until President Trump’s nominee for the position, Jay Clayton, has been approved by Congress. The letter states however that: “Commissioner Piwowar “has decided to jumpstart the deregulatory agenda, freezing unfinished Dodd-Frank requirements and opening the door to scaling back some completed rules he considers ‘politicized’ – a major exertion of authority for a position usually seen as a short-term caretaker.”

The Senators, Elizabeth Warren, Robert Menendez, Brian Schatz and Sherrod Brown were particularly concerned about Piwowar’s decision at the end of January to direct SEC staff to reconsider whether the 2014 guidance on the conflict minerals rule is still appropriate and whether any additional relief is appropriate.

The letter also questions Piwowar’s decision to reopen consultation with companies over the implementation of the rule requiring disclosure of pay ratios for chief executives and staff. Senators have already written to Piwowar himself urging him to implement this rule.

The Senators also refer to a report in the Wall Street Journal in February which stated that Piwowar had taken unilateral administrative action to impose “fresh curbs on the agency’s enforcement staff, scaling back their powers to initiate subpoenas and conduct investigations of alleged financial misdeeds.”

The senators went on to state that “There is no evidence that any of these changes in the SEC’s course are desired, or have been sought, by the person nominated to be the next SEC Chair. At his confirmation hearing, SEC Chair-nominee Jay Clayton testified that he had not been consulted about Acting Chairman Piwowar’s change to enforcement policy, did not know enough to know whether it was appropriate to reopen the pay ratio rule, and had no specific plans to revisit any Dodd-Frank.- mandated rules.” 

They are calling on Hoecker to investigate any specific changes in SEC policy, regulation, or guidance that were made or initiated by Piwowar during his tenure as acting SEC chair; what impacts these may have had;  whether he had valid substantive justification for these changes; whether he gave sufficient notice and correctly followed SEC rules when he restarted consultations and whether Piwowar was carrying out these actions at his own initiative, or whether he may have had direction from anyone inside or outside the US administration.

What do you think?