The change in command portends a significant shift at the SEC, which has for six years focused on tightening rules required by the 2010 Dodd-Frank Act, a regulatory overhaul championed by Democrats.
A Republican SEC chairman, appointed by President-elect Donald Trump, also could pull back on a host of rules that White conceived, including curbs on mutual funds’ use of derivatives, and stricter controls on algorithmic traders and off-exchange venues known as dark pools.
White’s departure also creates uncertainty in the short run because the SEC would have to operate with just two of the five commissioner seats filled after she leaves. Gridlock could ensue because one commissioner would have an effective veto on any regulatory decision or enforcement action.
“Everything under Dodd-Frank is now up in the air,” said Scott Kimpel, a partner at Hunton & Williams who previously worked as a legal adviser to a Republican SEC commissioner.
During White’s tenure, which began in April 2013, the SEC overhauled the regulation of money-market mutual funds, credit-rating firms, stock exchanges, and electronic trading venues. She frequently navigated political infighting at the SEC to complete Dodd-Frank requirements, and such friction could continue under a Republican chairman.
The SEC is normally governed by five commissioners, including three from the president’s party and two from the other. President Barack Obama nominated two candidates to fill the existing vacancies more than a year ago, but the gridlocked Senate hasn’t confirmed them. Republican Commissioner Michael Piwowar is likely to lead the agency as acting chairman after White exits, although Trump could nominate someone else as White’s permanent successor.
The SEC also pursued record numbers of enforcement cases during White’s term, including claims against private equity firms such as Blackstone Group and Apollo Global Management. Her handpicked priorities included the policing of financial-reporting fraud and punishing even the smallest violations on the theory that it would deter a culture of misconduct.
Trump hasn’t yet signaled his choices to fill SEC vacancies. But his aides have tapped Paul Atkins, a conservative former SEC commissioner, to handle issues related to the transition for the SEC and other financial regulatory agencies.
The change in leadership at the SEC is just one of many ways financial regulation is expected to change course sharply – through personnel and policy – during Trump’s presidency. His transition team on November 10 issued a statement saying it was crafting a plan to “dismantle the Dodd-Frank Act.”
Write to Dave Michaels at firstname.lastname@example.org, Aruna Viswanatha at Aruna.Viswanatha@wsj.com and Andrew Ackerman at email@example.com
This article was published by The Wall Street Journal