April 11, 2016

SEC Commissioner Nominees: Political Spending Disclosure Throws a Wrench

Last Thursday, the Senate Banking Committee met to approve the two SEC Commissioner nominees – but rather than going through the motions of a routine approval, a group of Democrats essentially forced a postponement after demanding that the SEC propose rules requiring political contributions disclosure. Here’s an excerpt from this WSJ article by Andrew Ackerman:

A revolt by Democratic lawmakers is jeopardizing the nominations of two White House picks for the Securities and Exchange Commission, threatening to further hamper the short-handed agency struggling to complete key rules. During what was expected to be a routine vote Thursday, a group of Democratic senators drew a line in the sand, demanding that the markets regulator adopt new rules forcing companies to disclose spending on political activities—an issue on which the commission’s current chairman, along with the nominees, have been noncommittal.

Four Democrats on the Senate Banking Committee, including Sens. Charles Schumer of New York and Robert Menendez of New Jersey, said they would oppose the SEC picks, after which the panel postponed the vote. The battle reflects growing desires by Democratic lawmakers and their allies to expand the SEC’s work beyond typical investor-protection issues. It also shows intensifying divisions within the party over the proper qualifications and policies for financial nominees. “The SEC needs commissioners who believe in and support campaign spending transparency, and unfortunately these nominees have yet to answer that call,” Mr. Schumer said in a written statement, adding the two nominees were “fence-sitting” on the issue.

The concerns cast a cloud over the ability of both SEC nominees—Lisa Fairfax, a Democrat, and Hester Peirce, a Republican—to win Senate confirmation, according to Senate aides. The SEC is now down to just three members, two less than its full complement, after two left the agency late last year. If the SEC remains with only three members for a prolonged period, it could be difficult for Chairman Mary Jo White to advance her agenda in what is likely her final year at the markets regulator.

The strength of the opposition is surprising, as the banking panel has easily advanced “paired” Democratic and Republican nominees in the past. That some Democrats are refusing to back Ms. Fairfax is also surprising because she was seen as a compromise pick after the White House’s favored selection for the SEC slot, a well-known corporate securities lawyer, ran into Democratic opposition last summer over his ties to industry. White House nominees for financial positions have faced increasing resistance from Democrats as the party is torn by internal debate over the proper qualifications and policies for such officials, an argument that has also spilled into the Democratic presidential contest.

Conflict Minerals: SEC Not Appealing to SCOTUS

As noted in this letter from Attorney General Loretta Lynch to House Speaker Paul Ryan, the SEC has decided not to appeal the result in SEC v. NAM to the US Supreme Court. As noted in this alert, this doesn’t impact the Form SDs being prepared now and Corp Fin’s April ’14 guidance remains as the last word…

PCAOB: Updated Standard-Setting Agenda

Last week, the PCAOB posted an updated standard-setting agenda that outlines milestones on various standard-setting projects…

Broc Romanek