In a letter dated December 12, 2016, to the Chair of the Senate Committee on Banking Housing and Urban Affairs, SEC Chair Mary Jo White took issue with a request to defer consideration of new rulemaking during the post-election period. Citing the SEC’s Canons of Ethics, the outgoing Chair reminded the Senate that it must act independently in performing its duties, “without fear or favor.”

The letter is noteworthy because it reveals new rules that “are ready for Commission consideration,” including, among others rules concerning:

  • investment company use of derivatives (Rule 18f-4)
  • web transmission of shareholder reports (Rule 30e-3)
  • capital, margin and segregation requirements for security-based swap dealers and major security-based swap participants
  • recordkeeping rules and notification requirements for security-based swap dealers and major security-based swap participants
  • orderly liquidation of certain broker-dealers
  • proposed disclosure rules for bank holding companies

None of these initiatives come as a surprise because Chair White has listed them as part of a long-standing agenda. The letter, however, serves as a useful reminder that the SEC is duty-bound to act independently and resist political pressure from any source. Chair White noted that, historically, the SEC has enacted important rules during comparable post-election periods. The SEC, she said, should not “deviate from its historical practice of independently carrying out its duties.”

Our take

With each passing day, the likelihood that Chair White will achieve the regulatory initiatives on her long-standing agenda fades. Chair White’s inability to complete her long-standing agenda due to political pressure should be a wake-up call to Congress that it should respect the SEC’s independence, not impede it.