SEC nominees to be vetted next week in Senate

Republican Hester Peirce and Democrat Lisa Fairfax are likely to be confirmed, and unlikely to shake up the status quo

Mar 10, 2016 @ 12:41 pm

By Mark Schoeff Jr.

After a five-month wait, two members nominated to the Securities and Exchange Commission will take the first step next week in what is seen as their likely Senate confirmation.

The Senate Banking Committee will hold a hearing Tuesday for Republican Hester Peirce and Democrat Lisa Fairfax, the nominees tapped by the White House in October to replace former SEC members Daniel Gallagher, a Republican, and Luis Aguilar, a Democrat.

Their nominations were delayed while the committee chairman, Richard Shelby, R-Ala., ran in a primary, which he won on March 1. Now that Ms. Peirce and Ms. Fairfax are back on track, it's likely they'll be approved by the panel and by the entire Senate.

David Tittsworth, counsel at Ropes & Gray and former CEO of the Investment Adviser Association, said the SEC nominees won't face collateral damage from the Senate controversy over the Supreme Court vacancy created by the death of Justice Antonin Scalia.

“I don't see any connection there,” he said. “It's too tenuous. I don't know why Republicans would want to pick another fight. The Senate Banking Committee and the full Senate will move quickly to approve both Hester and Lisa.”

Ms. Peirce, a senior research fellow at the Mercatus Center at George Mason University in Arlington, Va., a conservative think tank, is a former Senate Banking Committee aide. She also worked at the SEC as a staff attorney in the Division of Investment Management and as a counsel to former SEC member Paul Atkins.

Ms. Fairfax is a law professor at George Washington University in Washington, D.C. She formerly was on the law faculty at the University of Maryland and an attorney at Ropes & Gray. She was nominated after a push by liberal interest groups and lawmakers like Sen. Elizabeth Warren, D-Mass., who wanted the Obama administration to select someone who did not have ties to Wall Street.

Both Ms. Peirce and Ms. Fairfax are members of the SEC Investor Advisory Committee.

One of the factors that will help push the SEC nominations through the Senate is that a Republican and Democrat are paired.

When nominations for the two open seats are approved, the agency will once again have its full complement of five members. But any two newcomers wouldn't be expected to have an immediate substantive impact because there will be a learning curve.

“I don't anticipate the arrival of Hester Peirce or Lisa Fairfax will change the agenda for investment advisers that's already under way for 2016,” said Karen Barr, president and chief executive of the Investment Adviser Association.

A confirmation hearing for SEC nominees is similar to one for judges in that it's not possible to discern exactly how they'll act in their positions based on their testimony. But it is possible to make some educated guesses.

“I don't see a seismic shift in the overall balance of the commission with the two new nominees,” Mr. Tittsworth said. “It will be similar to what you had when Dan Gallagher and Luis Aguilar were there.”

For instance, Ms. Peirce is likely to share Mr. Gallagher's skepticism for a uniform fiduciary duty rule that would raise investment advice standards. She has expressed concern about the Labor Department's fiduciary duty rule.

“By what I see from Hester, it appears she holds the same position on uniform fiduciary duty as Dan Gallagher,” said Knut Rostad, president of the Institute for the Fiduciary Standard.

Interestingly, Ms. Peirce aired doubts about SEC Chairwoman Mary Jo White in a statement on March 11, 2013, just before Ms. White's confirmation hearing. She made it clear she's not a fan of the SEC's emphasis on enforcement.

Ms. Peirce said Ms. White's extensive experience as a prosecutor was not a good fit for leading the SEC.

“The SEC is fundamentally a regulatory agency, not a law enforcement agency,” Ms. Peirce said. “The SEC has plenty of enforcement lawyers and a tendency to tout enforcement statistics as a measure of success, but enforcement is supposed to be subordinate to the rulemaking function.”


What do you think?

View comments

Recommended for you

Upcoming Event

Apr 30


Retirement Income Summit

Join InvestmentNews at the 12th annual Retirement Income Summit - the industry's premier retirement planning conference.Much has changed - and much remains to be learned. Attend and discuss how the future is full of opportunity for ... Learn more

Featured video

Gadget Girl

How Tamarac’s new platform will help advisers better engage with clients

Tamarac recently announced the launch of the Tamarac platform for Registered Investment Advisors. What can advisers expect from the completely redesigned platform?

Latest news & opinion

Nontraded REITs to post worst sales since 2002

The industry is on track to raise just $4.4 billion, well off the $19.6 billion it raised just four years ago, as new regulations hinder sales.

Broker protocol for recruiting a boon for clients

New research finds advisers whose firms have joined the agreement take better care of customers.

Meet our 2017 Women to Watch

Introducing 20 female financial advisers and industry executives who are distinguished leaders, advancing the business of providing advice through their creativity and hard work.

Raymond James executives call on industry to keep broker protocol

Also ask firms to pay for the administration of the protocol to 'ensure its longevity and relevance.'

Senate committee approves tax plan but full passage not assured

Several Republican senators expressed reservations about the bill, and the GOP cannot afford too many defections.


Subscribe and Save 60%

Premium Access
Print + Digital

Learn more
Subscribe to Print