Crypto Mom Wants SEC to Wear “Reasonableness Pants”
You may agree or disagree with her remarks, but a speech by SEC Commissioner Hester Peirce – aka “Crypto Mom” – is always news. Her recent speech at Rutgers-Camden Law School is no exception. In discussing the SEC’s enforcement program, she makes no bones about her opposition to the enforcement approach favored during the tenure of former Chair Mary Jo White:
“Most enforcement recommendations the Commission receives from the staff are legally straightforward and not controversial, but a small subset causes me to ask whether we are wearing our reasonableness pants.
In particular, I am not a fan of the so-called “broken windows” philosophy, a more-is-always-better, punish-the-small-violations approach to enforcement. Instead, I assess, when reviewing an enforcement recommendation from our staff, whether the recommendation is using our enforcement resources wisely. I ask, was there a meaningful violation? Is this a matter that could have been handled by our exam program? Are there other appropriate responses in lieu of an enforcement action, such as a rulemaking, interpretative guidance, or an educational bulletin for investors?”
While she devotes much of her discussion to the SEC’s enforcement program, her “reasonableness pants” comments extend to the agency’s approach to rulemaking & interpretive guidance as well:
“Lots of people want the SEC to wade into a whole range of issues that are not properly within our purview. Increasingly, we are urged to tell companies how many women to have on their boards, to limit the ways companies and their shareholders may resolve disputes, to direct financial firms to avoid providing capital for certain industries, or to prohibit investors from getting access to certain products we think investors should not have in their portfolios.
We do not have the time, resources, or authority to do these things. We have other things to do that are not headline-grabbers, but are neatly within our core mission.”
Issues that should take priority in her view include things like updating transfer agent rules, disclosure modernization, fixed income & equity market structure, and ensuring that companies and investors across the country can participate in the capital markets. Peirce said these issues may not be as “trendy” as those that the SEC is being urged to undertake , but “subsequent generations will look back at us in disgust and wonder why we sacrificed the health of our capital markets for the chance to look cool for a moment.”
-John Jenkins, TheCorporateCounsel.net May 16, 2019
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