Republican SEC Commissioner Michael Piwowar’s Monday announcement that he will resign his position on July 7 could throw a wrench into the progress — or not — of the agency’s recently released standards of conduct proposal for brokers and advisors.
Piwowar’s term is set to expire on June 5, but commissioners can stay on for 18 months after their term expires.
Commissioner Kara Stein, a Democrat whose term expired last year, is also set to leave the commission this year.
Piwowar and Stein are set to leave as the agency takes comments on its recently released standard of conduct proposals for brokers and advisors.
What Your Peers Are Reading
The “wide difference of views among the commissioners” when voting on April 18 to put the three-pronged proposal out for public comment “means that reaching a final rule is going to require a compromise,” former SEC Commissioner Luis Aguilar told ThinkAdvisor in a Tuesday email message.
“That need hasn’t changed with the departure of Commissioner Piwowar,” Aguilar said. “In fact, Chairman [Jay] Clayton may actually have an easier time reaching a compromise with just three other commissioners rather than four commissioners, as there is one less view to consider.”
Ultimately, Aguilar added, “if everyone keeps the needs of investors foremost in mind, it remains possible for a principled and rational compromise to be reached that benefits investors.”
Bob Plaze, the former co-director of the SEC’s Division of Investment Management, agreed in another comment to ThinkAdvisor that Piwowar and Stein’s departures “themselves will not likely ‘complicate’ the rulemaking,” as its “unlikely the rulemaking would be ripe for adopting” by the end of the year.
“Who replaces [Piwowar and Stein] and what their views are on the rulemaking is the great unknown, and may either complicate or facilitate adoption of the rules,” added Plaze, who’s now a partner at Proskauer Rose in Washington.
Former SEC Chairman Harvey Pitt told ThinkAdvisor the same day that the SEC standard of conduct proposal “itself recognized the need for feedback, and provided a several-month comment period, reflecting the expectation (and hope) that the details of the rule would benefit by meaningful public input.”