Close Close
Popular Financial Topics Discover relevant content from across the suite of ALM legal publications From the Industry More content from ThinkAdvisor and select sponsors Investment Advisor Issue Gallery Read digital editions of Investment Advisor Magazine Tax Facts Get clear, current, and reliable answers to pressing tax questions
Luminaries Awards

Regulation and Compliance > Federal Regulation > SEC

Senators Grill SEC Commissioner Nominees

Your article was successfully shared with the contacts you provided.

Hester Peirce, a nominee to be a commissioner at the Securities and Exchange Commission, said Tuesday that she is “quite worried” that the Department of Labor failed to consider the agency’s input on its forthcoming rule to amend the definition of fiduciary on retirement advice, and that she fears the rule will “cut a whole segment of people” from access to advice.

Peirce, a Republican, along with SEC commissioner nominee Lisa Fairfax, a Democrat, faced congratulations – and sometimes heated questions — from members of the Senate Banking Committee during their confirmation hearing Tuesday.

Sen. Tim Scott, R-S.C., said during the hearing that he worries DOL’s rule to change the definition of fiduciary under the Employee Retirement Income Security Act “will make winners and losers of small investors.” He then asked Peirce and Fairfax their thoughts.

“I’m quite worried about DOL’s proposal because I’ve heard that the SEC’s input wasn’t considered,” Peirce responded.

“We need to understand how rules like this are going to impact everyday people,” she said, adding that if confirmed she would “want to see what work SEC and DOL had done” on the rulemaking.

“Protecting investors in this [retirement] space and protecting access to advice is also important,” added Fairfax, “particularly for low- and middle-income investors.”

Both Peirce and Fairfax agreed that economic analysis of rules as well as retrospective reviews of rules are important, with Peirce noting “equity market structure” rules that the commission has “built up” over many years needed to be reassessed.

As to the SEC’s “neither admit nor deny” policy for enforcement actions, Peirce said the SEC enforcement record “shows admission of guilt is infrequent,” and that “there’s a stronger message if there’s an admission of wrongdoing.” She noted that “repeat offenders is a case where it is worth it [for the SEC] to take the extra resources to get an admission of wrongdoing.”

She added also that the SEC needs more expertise in the fixed income area and that the SEC should examine how it can “shore up” its oversight of the Financial Industry Regulatory Authority.

Sens. Chuck Schumer, D-N.Y., and Bob Menendez, D-N.J., grilled both women on whether they believed the Commission should take up a petition for rulemaking before the agency on corporate political spending.

Schumer said that he was “very upset” that SEC Chairwoman Mary Jo White “has not gone forward on this” request for rulemaking, which has received a whopping 1.2 million comments.  Schumer pressed both on providing “an answer, not gobbledygook” on where they stood on taking up such a measure if at the SEC.

Both noted a “budget bill that appears to prevent rulemaking” on this very issue, with Peirce stating that “I think the Commission doesn’t have the freedom to ignore mandates from Congress.” She added: “The Congress has said it should not be a priority for the SEC.”

Responded Schumer: “That doesn’t cut muster with me. Right now I’d be leaning against both of your nominations given your answers.” Sen. Elizabeth Warren, D-Mass., took Peirce to task on her vocal opposition to the Dodd-Frank Act, notably the book she wrote while at the free-market-oriented Mercatus Center, “Dodd-Frank: What it does and why it’s flawed,” and questioned her ability to help the agency “write and enforce” dozens of Dodd-Frank rules given her vocal opposition to the law.

“I wrote those comments not in the context of regulator but in the context of an academic,” Peirce responded, noting that she spent eight years at the Commission as a regulator.  

Peirce, currently a fellow for the Mercatus Center at George Mason University, would replace SEC Commissioner Daniel Gallagher, a Republican, who left his post on Oct. 2; Gallagher’s term was to expire in 2016. 

Peirce has also served as a lawyer for the Senate Banking Committee.

George Washington University law professor Fairfax replaces Luis Aguilar, a Democrat, who left the agency on Dec. 1. Fairfax is the Leroy Sorenson Merrifield Research Professor of Law at the George Washington University Law School. Prior to joining the GW law faculty, she was a professor of law and director of the Business Law Program at the University of Maryland School of Law.

Fairfax said during the confirmation hearing that she has “never held a securities license.”

— Check out What’s Worse Than the SEC’s Revolving Door? on ThinkAdvisor.


© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.