Top democratic senators are calling on the Securities and Exchange Commission’s inspector general to investigate Acting Chairman Michael Piwowar’s recent moves to scale back Dodd-Frank rulemaking and agency staffs’ investigative powers, asserting such moves are an abuse of his authority.
In a Wednesday letter to the securities regulator’s IG, Sen. Elizabeth Warren, D-Mass.; Sherrod Brown, D-Ohio; Bob Menendez, D-N.J.; and Brian Schatz, D-Hawaii said Piwowar is abusing his temporary authority to reconsider congressionally mandated Dodd-Frank rules and to scale back the investigative powers of the agency’s enforcement staff.
Piwowar’s actions, the senators wrote, “may lack adequate justification, undermine the SEC’s mission, exceed his authority as acting chairman, violate other procedural requirements, and could potentially prove to be a waste of the SEC staff's precious time and resources.”
All the senators are members of the Senate Banking Committee.
Jay Clayton, President Donald Trump’s nominee to head the agency, told the Senate Banking Committee on March 23 when queried on what he thought of recent comments by Piwowar that he planned to “halt” mandated Dodd-Frank Act rulemakings, that “rulemaking should go forward as required by statute.”
Clayton, whose confirmation hearing by executive action is set for April 4, told the Senate Banking Committee that he doesn’t have “any specific plans for an attack” on the Dodd-Frank Wall Street Reform and Consumer Protection Act if confirmed, only a review, and that unfinished rules mandated by Dodd-Frank “should go forward.”
The senators noted in their letter that Piwowar will hold the acting chairman title “only until the Senate confirms a permanent chairman,” and that the SEC “has lacked a traditional quorum during Commissioner Piwowar’s entire tenure as acting chairman because there has only been one additional confirmed commissioner.”
Nevertheless, 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 wrote.
Piwowar “unilaterally directed the staff to reconsider whether the 2014 guidance on the conflict minerals rule is still appropriate and whether any additional relief is appropriate,” the senators wrote, also questioning his authority to seek new public input on the pay ratio rule — “a congressionally mandated final SEC rule” requiring publicly traded companies to disclose how senior executives’ compensation compares with that of the firm’s average employee.
The acting chairman’s “political views are not a sound basis for undoing a congressional mandate and reopening a final SEC rule for comments only on supposed industry hardship. And he once more appears to have acted without notifying or seeking the approval” of Commissioner Kara Stein.
Should Clayton be confirmed, “and should he disagree with the policy changes being pursued by Commissioner Piwowar, significant SEC staff work will have gone to waste,” the senators argued.
They asked the IG to investigate Piwowar’s decisions to determine whether they are “legally permissible” and in keeping with the SEC’s core mission, including whether Piwowar provided adequate public notice and comment periods, and followed all required SEC guidelines and rules for taking action, including the SEC’s quorum requirements.
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