Earlier this month, eleven U.S. Senators – all the Banking Committee Democrats – urged the White House to begin the process for nominating Democratic officials to the bipartisan agencies within the Committee’s jurisdiction, including the SEC. The letter written by Senators Warnock and Van Hollen argues:

Open-ended vacancies damage the leadership structure that Congress established for these agencies. A full slate of commissioners and board members can bring a range of perspectives to policies that shape our markets. But as the SEC, FDIC, NCUA, and EXIM now pursue consequential reforms across the economy and financial system, we are concerned that their lack of Democratic voices thwarts congressional intent. And while empty board seats are a pressing issue at a number of agencies, they are an especially important concern for the Committee, with several significant multi-member commissions within its jurisdiction.

For the SEC, the Senators point to reports that the Administration is preparing to nominate a new Republican to the SEC to replace Commissioner Peirce, without making any moves to fill the other two vacancies reserved for Democrats.

The White House is doing so despite the fact that the Securities Exchange Act mandates that SEC nominations alternate between parties “as nearly as may be practicable” and Chair Paul Atkins, a Republican, was the most recently appointed commissioner.

We should be clear: No practical barrier prevents the President from next appointing a Democrat to the SEC. If the President nominated a Republican to replace Commissioner Peirce without also nominating a Democrat to the SEC, he would violate the Securities Exchange Act.

The latest Goodwin Public Company Advisory News Roundup has this reminder:

By statute, the SEC is to be composed of five commissioners appointed by the President by and with the advice and consent of the United States Senate. Not more than three of such commissioners may be members of the same political party, and in making appointments, members of different political parties are required to be appointed alternately as nearly as may be practicable.

The SEC has been down to three commissioners, all of the same party, since early this year, and Commissioner Peirce will depart the agency in the fall when her term extension expires.

– Meredith Ervine