A Trump SEC could shake up current policy

Conservative views almost certain to prevail

WASHINGTON • It will be a new day at the U.S. Securities and Exchange Commission after president-elect Donald Trump installs his choice to run the agency.

With Trump’s transition team already in regulatoryrelief mode and promising to revamp the Dodd-Frank financial reform legislation, some rules already are marked for death or dialback.

Expected on the chopping block soon after Trump takes the oath of office is a proposal that would require companies to disclose pay ratios between their CEOs and employees. Another would require companies to disclose whether their products contain conflict minerals — minerals that were mined in a war-torn region of Africa.

Dead for now is any prospect of the SEC approving a tough fiduciary rule for financial advisers, say policy experts.

Trump’s decision to tap former Republican SEC commissioner Paul Atkins to help manage the Trump team’s transition efforts at the SEC and other financial agencies offers a window into some other changes that could be in store. Atkins, the founder of the regulatory consulting firm Patomak Global Partners, is viewed by some to be a top contender for the position of SEC chairman itself, though as the transition head he could also recommend someone else for that job.

Atkins’ well-known conservative views on everything from enforcement penalties to corporate governance are likely to be reflected in the SEC’s agenda.

Here are five policy areas likely to change.

Paul Atkins was a staunch critic of the Public Company Accounting Oversight Board (PCAOB), a body created after the Enron accounting scandal to police and write new rules for corporate auditors.

Atkins raised concerns about the board’s budget and high salaries, and advocated against prescriptive accounting rules that he felt constrained A member of Donald Trump’s transition team once urged the SEC to require whistleblowers to report internally first. auditors from making professional judgments.

Recently, Republicans have criticized the PCAOB for taking on more progressive causes, such as proposing companies rotate auditors to reduce conflicts or requiring accounting firms to disclose the name of individual partners working on company audits.

PCAOB chair Jim Doty, who advocated for the reforms, will almost certainly not be reappointed by the incoming SEC chair.

“I expect that a new chair will refocus the board’s standard-setting agenda on the core audit function,” said Hunton & Williams partner Scott Kimpel. “I would expect a return to the basics.”

The topic of whether to impose corporate penalties against a company would come under scrutiny.

During his time at the SEC, Atkins advocated for an enforcement approach that he said did not unduly punish corporate shareholders who had already suffered from the misconduct. He called for the SEC to carefully weigh who had profited from the bad behaviour, and urged the SEC to hold individuals accountable for their actions.

Atkins has long opined that the SEC’s rules requiring “best price” execution of stock trades actually skews the market by causing fragmentation and harming price discovery by directing orders away from traditional stock exchanges into “dark pool” trading platforms.

As a commissioner, Atkins was critical of the rule called Regulation National Market System (NMS), saying it could impede true price discovery and encourage gaming of the system.

In January, 2016, he wrote an opinion piece in The Wall Street Journal calling for the SEC to do major surgery on the rule, allowing considerations beyond “best price” and speed to determine order flow.

The Dodd-Frank law gave the SEC new-found powers to reward whistleblowers who come forward with tips of corporate malfeasance.

From August, 2011, through fiscal year 2015, the SEC has received more than 14,000 tips, and by August of 2016, the program had given out more than US$100 million in rewards.

But corporate America has long disliked the part of the rule that protects whistleblowers from having to report wrongdoing to their own companies before they tip off the government.

In 2011, Atkins urged the SEC to require whistleblowers to report internally first, saying a failure to do so could undermine compliance programs.

Whether this will change remains to be seen, especially in the wake of the Wells Fargo scandal, where employees who reported internally about unauthorized accounts were fired.

Atkins “cares deeply about the commission and its enforcement program,” said Jordan Thomas, a whistleblower attorney at Labaton Sucharow who previously worked in the SEC’s enforcement division during Atkins’ tenure. “I find it very hard to believe that he would support undermining such a successful program.”

Atkins was a strong proponent of the 2012 Jump Start Our Business Startups Act, which scaled back some SEC rules to help smaller companies raise capital.

In testimony on Capitol Hill, Atkins advocated for additional steps to be taken to help smaller companies, including rules to help create venture exchanges for mid-cap stocks and broadening efforts to exempt private capital-raising rules from regulation by states. we’ve done very well,” Bullard told reporters in London on Wednesday. “The rancor around global central banks, however, or the Fed at least, has not declined as much as I thought it might by this point, so there’s still a lot to talk about.”

Carney and ECB president Mario Draghi have argued that the prolonged period of low interest rates gave governments time to make changes to the labour market and social insurance programs that would spur growth in the long term. That’s an opportunity they’ve largely missed while focusing on reducing budget deficits since the financial crisis.

“What I do not accept, there is a line of thought that is that central banks should not focus on their remit, they should tighten policy in order to force governments to take tough decisions,” Carney said. “That is political.”

One particular sticking point identified by the U.K. central bank governor is the U.K.’s house-price inflation, which some argue is being boosted by the BOE’s 0.25-per-cent base rate. Carney doesn’t share that view.

“House prices in the U.K. are high because there’s no supply,” he said. “The more we avoid this point, the more we pretend that the ills are the consequence of monetary policy. That’s why I said earlier this is a massive blame deflection exercise. We’re going to do what we have to do, given the suite of all the other policies in place.”