Sen. Warren attacks SEC chairwoman White’s leadership
Says top regulator is not pressing for admission of guilt in enforcements, and granting too many waivers.
A Democratic senator who has become a scourge of Wall Street unloaded Tuesday on Securities and Exchange Commission Chairwoman Mary Jo White, drawing mixed reviews for her criticism of the agency’s direction.
“You have now been SEC chair for over two years, and to date, your leadership of the commission has been extremely disappointing,” wrote Sen. Elizabeth Warren, D-Mass., in a 13-page letter to Ms. White that took her to task in several areas.
In her critique, Ms. Warren said the SEC has failed to follow through on Ms. White’s promise to force more financial firms to admit guilt in enforcement settlements. Between Ms. White’s announcement of the new policy in June 2013 and the end of the last fiscal year in September, the SEC required admissions of guilt in only 19 of 520 settlements, according to Ms. Warren’s letter.
Ms. Warren also slammed the SEC for granting 20 waivers, mostly to large financial firms, for violations of securities laws during Ms. White’s tenure, which began in April 2013. Democratic SEC commissioner Kara Stein also has consistently criticized the agency on its waiver policy.
In her own defense, Ms. White said the SEC had achieved a “record year in enforcement” and proposed or adopted more than 30 congressionally mandated rules under her watch. The agency brought 755 enforcement actions in fiscal 2014 and obtained $4.1 billion in penalties and disgorgements.
“Senator Warren’s mischaracterization of my statements and the agency’s accomplishments is unfortunate, but it will not detract from the work we have done, and will continue to do, on behalf of investors,” Ms. White said in a statement.
One investment adviser defended Ms. White, saying she has a difficult task in leading the politically divided five-member commission.
“The chair has to be a regulator, a navigator and a referee,” said Paul Auslander, director of financial planning at ProVise Management Group. “I think she’s done an exceptional job in those capacities.”
He also praised her for coming out in favor of a uniform fiduciary duty for retail investment advice.
“She’s the first chair that’s discussed the ‘F-word’ in a meaningful way,” Mr. Auslander said.
Another adviser said there could be room for improvement at the SEC, but the agency should not go too far in appeasing critics such as Ms. Warren.
“They can always do better, but you don’t want the pendulum to swing to over-regulation,” said Daniel Lash, a partner at VLP Financial Advisors. “Over-regulation can be stifling for growth purposes.”
It’s difficult to know how to quantify the ideal SEC enforcement-penalty output, according to Mr. Lash.
“How do you gauge that?” he said. “Should it be $8 billion? Is it $20 billion?”
A consumer advocate endorsed Ms. Warren’s tough assessment of the SEC’s record.
“There’s a legitimate case to be made that the SEC has failed to deliver an investor-protection agenda,” said Barbara Roper, director of investor protection at the Consumer Federation of America. “There’s cause to be disappointed in the SEC.”
But Mr. Auslander said Ms. Warren went too far in her attacks.
“She’s the Rand Paul of the Democratic Party,” said Mr. Auslander, president of the Financial Planning Association of Florida, referring to the firebrand Republican senator from Kentucky. “For whatever reason, she’s grandstanding.”
Ms. Warren, a member of the Senate Banking Committee, indicated that she will continue to pressure Ms. White.
“I am disappointed that you have not been the strong leader that many hoped for — and that you promised to be,” Ms. Warren wrote.
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