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SEC Commissioner Hester Peirce.

Regulation and Compliance > Federal Regulation > SEC

The SEC Is 'Scaring People Off': Hester Peirce

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The Securities and Exchange Commission is “scaring people off from coming in and having a conversation with us,” SEC Commissioner Hester Peirce said Tuesday.

In remarks at the Practising Law Institute’s SEC Speaks conference in Washington, Peirce, a Republican, said that “productive interactions with the SEC are fewer and further between than they were in the past.”

When individuals and entities “come to the SEC with their novel ideas, their feedback, their concerns, their objections, their questions about implementation of a new rule or application of an old one to new circumstances, too often now they are met with … well, crickets,” Peirce stated.

Peirce relayed that “Neither staff expertise nor issues ripe for analysis are lacking, so what has changed?”

In part, “the staff, run ragged by a punishing rulewriting agenda, does not have the bandwidth to think about hard, novel legal questions,” she asserted. “The remote work norm also may play a role as it reduces opportunities for spontaneous staff collaboration to work through tough questions.”

That being said, “the root of the problem, though, is that the Commission discourages the staff from offering much more than silence, shrugs, sighs, and slow-walking. The culture at the top of the SEC has changed, which in turn has changed the way the agency interacts with the public,” she explained.

Said Peirce: “Countless people have told me that they used to feel comfortable coming in and speaking with the Commission and its staff, but no more. When it comes to interpretive guidance, ‘the Commission is closed for business.’

“New product ideas? ‘Not now.’ Approval to do things for which other firms already have approval? ‘That permission was very limited.’ Feedback on how to a particular set of facts interacts with a new rule? ‘We cannot provide legal advice,’” she relayed.

Interactions that do occur, Peirce continued, “often are an interminable round of unproductive monologues before an unresponsive audience. Even processes that historically have been straightforward, such as filing for new funds, have become complicated.”

The “stilted communication, half-hearted engagement, quick-draw of enforcement guns, and limited transparency that characterize the Commission’s current relationship with the industry we regulate should concern anyone who cares about this great institution and the amazing markets we regulate,” she proclaimed.

Peirce suggested that the agency needs to “pare back” its rulemaking agenda; use concept releases, public roundtables and consensus workshops to help it identify problems in need of solving and workable solutions; propose realistic rules without clickbait provisions, which occupy commenters’ attention and invariably fall away at the adoption stage; and form an advisory committee made up of chief compliance officers to understand how rules actually operate.


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