Potential Changes in SEC to Affect Registrants

• Date: 01 May 2017
• Published date: 01 May 2017
• Author: Donald A. Walker
• DOI: http://doi.org/10.1002/jcaf.22269

87

© 2017 Wiley Periodicals, Inc.

Published online in Wiley Online Library (wileyonlinelibrary.com).

DOI 10.1002/jcaf.22269

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SEC

Potential Changes in SEC to

Affect Registrants

Donald A. Walker Jr

CHANGES IN SEC

ADMINISTRATION

Since the election and

the inauguration of Presi-

dent Trump in January 2017,

the Securities and Exchange

Commission (SEC) has

undergone major person-

nel changes. Many division

heads and officials have left

the agency and the president

has announced a nominee

for chairman. That nomi-

nee is perceived as being less

inclined to regulate and to

bring enforcement actions.

President Trump has indi-

cated that his goal is to reduce

regulations and especially to

reduce financial regulation

by revising Dodd-Frank and

possibly other laws such as

the Foreign Corrupt Practices

Act. Actions taken by White

House staff to monitor com-

munications of various execu-

tive agencies suggest that the

actions and communications

of the SEC will receive closer

scrutiny from and coordina-

tion with the new adminis-

tration. In addition, White

House directives limiting hir-

ing will reduce staff resources.

The top management

makeup of the Commission

is changing rapidly. The chair

of the Commission is being

replaced. The three open seats

on the Commission including

the chairman are likely to be

filled as soon as the vetting

and appointment and Senate

confirmation process can be

completed. Operations man-

agement of the Commission is

changing, along with the divi-

sional managements. There will

likely be a period of reconsti-

tuting lines of communication

and protocols and of getting

to know new colleagues and

supervisors.

Securities Act regis-

trants may benefit from the

announced emphasis on capital

formation, potentially experi-

encing accelerated reviews of

transactional filings resulting

from increased SEC manage-

ment pressures to focus on the

most critical disclosure issues.

Exchange Act registrants

may benefit from an atmo-

sphere in the Division of Cor-

poration Finance that encour-

ages a narrower focus on larger

issues and reduced numbers of

comments and comment letters.

With the emphasis on cur-

tailing new regulations and

revising or reducing current

regulations, and the near-

completion of rules required by

the Dodd-Frank Act, the staff

of the Division of Corpora-

tion Finance will have addi-

tional resources to accelerate

its addressing of confidential

treatment orders and no-action

and interpretive and exemptive

letters.

Staffing limitations and

changes in division heads may

result in softening aggressive

broker-dealer and transfer

agent examination plans. Staff-

ing limitations may also slow

the progress of Enforcement

Division forensic investigations

and cases if turnover tends

to increase and institutional

memory is lost. In addition,

the division and Commission

may act to reduce the number

of investigations converted to

active cases.

Whistleblowers provide

the most timely, compre-

hensive, and well-supported

indications of disclosure and

financial fraud violations, and

generally provide the most

effective and timely door