Elizabeth Warren asks Obama to replace SEC's Mary Jo White

Despite record enforcement at the agency, the senator focused on Ms. White's failure to further a rule for disclosing political spending and other 'brazen conduct'

Oct 14, 2016 @ 11:24 am

By Jeff Benjamin

Sen. Elizabeth Warren
+ Zoom
Sen. Elizabeth Warren

Sen. Elizabeth Warren has asked President Barack Obama to replace SEC Chairwoman Mary Jo White, despite two straight years of record-level enforcement actions by the agency.

In a letter to the president Friday morning, Ms. Warren focused on Ms. White's “refusal to develop a political spending disclosure rule and repeated actions to undermine the agency's mission of investor protection and the administration's priorities.”

Ms. Warren, D-Mass., argues that the disclosure rule would increase transparency for investors by requiring companies to report political contributions.

“Congressional Democrats and the administration have strongly opposed a Republican rider in recent government funding bills that would prevent the SEC from issuing a rule requiring public companies to disclose political contributions,” she stated. “But Chair White herself has steadfastly refused to issue such a rule, despite overwhelming investor and public support for it.”

In her letter, Ms. Warren reminded the president that he “may designate a new SEC chair at any time from among the existing SEC commissioners.”

An SEC spokeswoman declined to comment on Ms. Warren's 12-page letter, which suggests the battle is just getting started.

"Congressional Democrats will fight to remove the recently passed rider from December's government funding legislation, and I urge you to threaten to veto any effort to extend this corrupt policy," Ms. Warren wrote. "But these efforts will be meaningless as long as Chair White continues to control the agenda of the SEC."     

Even though Ms. Warren's passion for increased regulatory oversight of the financial services industry has never been subtle, it might be missing the big picture, according to Todd Cipperman, principal at Cipperman Compliance Services.

“I think you'd have a hard time finding anyone in the investment management industry who would say Mary Jo White has been easy on the industry,” he said. “I think the industry views the SEC's enforcement staff as being very tough, and [Ms. White] has a very significant enforcement record.”

For the fiscal year ending in September, the SEC brought a record 868 enforcement cases, beating the prior year's record of 807 cases, including 160 against financial advisers and investment companies.

In her letter to the president, Ms. Warren describes Ms. White's refusal to fall in line as “brazen conduct” and “merely the most recent and prominent example of Chair White undermining your administration's priorities and ignoring the SEC's core mission of investor protection.”

Amy Lynch, president of Frontline Compliance, described Ms. Warren's comments as “a bit harsh, but I don't think she's ever been a fan of Mary Jo White.

“Sen. Warren is very pro-regulation, and she views Mary Jo White as being pro-industry,” Ms. Lynch said. “But there are lots of rules the commission has refused to act on, so I'm wondering why [Ms. Warren] is so focused on this one rule.”

Mr. Cipperman is not surprised by Ms. Warren's dogged efforts to push the SEC toward tougher enforcement, and he thinks the financial services industry should brace for more of that kind of aggressive tone.

“I would think the industry would like to see the SEC acting like more of a traditional regulator, as opposed to something that operates as an enforcement body,” he said. “Enforcement actions have pushed the envelope on legal interpretations, but a more traditional regulator would give guidance, particularly when there's no client harm. Ms. Warren is the complete other side of that. She's suggesting that Mary Jo White is not hard enough on the industry.”

Even if Ms. Warren fails in her efforts to get Ms. White replaced at the SEC, Mr. Cipperman said financial advisers should expect more of the same from the left wing of the Democratic party.

“It is very concerning that you have this pressure on the SEC and on the president to appoint someone who will take the industry even more to task,” he said. “I think you'll continue to see an uptick in this kind of pressure and enforcement, even if a Republican wins the White House.”

0
Comments

What do you think?

View comments

Recommended for you

Sponsored financial news

Upcoming Event

Apr 30

Conference

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

Events

How to redesign, rebrand and recast your practice

Redesigning and reshaping your practice is a tough pill to swallow for advisers. But what got you here won't get you there, says John Kozuch, a Chicago financial adviser.

Video Spotlight

The Search for Income

Sponsored by PGIM Investments

Recommended Video

Path to growth

Latest news & opinion

How does your advisory firm stack up?

Comparing a firm's pay to the competition can point out vast flaws.

10 signs your client is cheating on you

Sure signs that clients may be on the way out the door.

Morgan Stanley sees slower fee-based asset flows on fiduciary rule delay

Flows to advisory accounts, while still higher than the start of 2016, dropped off more than 20% from Q2 and were the lowest in a year.

How adviser salaries stack up to other jobs

Median compensation hovers just under $100,000 on the low end and reaches nearly $300,000 for bosses.

Finra ranking brokers in effort to crack down on industry's bad apples

All 634.403 reps have been ranked based on factors such as prior regulatory disclosures, disciplinary actions and employment history.

X

Subscribe and Save 60%

Premium Access
Print + Digital

Learn more
Subscribe to Print