Head of Trump's SEC transition may not have to look far for new chairperson

Paul Atkins, chief executive of compliance consultant Patomak Global Partners and a former SEC commissioner, could select from among his coworkers or even recommend himself

Nov 14, 2016 @ 2:02 pm

By Mark Schoeff Jr.

Paul Atkins may not have to search far to find someone to recommend to President-elect Donald Trump as the next chairman of the Securities and Exchange Commission. He could look in the mirror or down the hall.

Mr. Atkins, a former SEC commissioner, is heading the transition team for the SEC and other independent financial regulatory agencies. He is also the chief executive of Patomak Global Partners, a financial services compliance consultant.

Over the years, Patomak also has become an Elba Island of sorts for former Republican SEC commissioners.

Former SEC member Daniel Gallagher Jr. became Patomak's president after leaving the SEC last year. Kathleen Casey also joined Patomak after departing the SEC in 2011.

Duane Thompson, senior policy adviser for Fi360, a fiduciary consulting firm, said Mr. Atkins may follow in the footsteps of former Vice President Dick Cheney and suggest himself for SEC chairman. If not, there's always Mr. Gallagher. 

“My sense is that they both would love to be the pick,” said Mr. Thompson. Patomak “could be a recruiting pool for SEC commissioners or the chair.”

An aide to Mr. Atkins referred a request for comment to the Trump transition office. Mr. Gallagher did not respond to a query.

Mr. Trump is off to a slower start than previous presidential transitions. Over the weekend, Mr. Trump announced his choices for chief of staff and strategy chief. It's likely that cabinet positions will be rolled out next followed by other agency heads.

But Mr. Trump has a penchant for surprises and could make unorthodox SEC selections in his effort to “drain the swamp” in Washington, as he puts it. 

“Whether that swamp includes the SEC remains to be seen,” Mr. Thompson said.

Although Mr. Trump's SEC chairperson may not be revealed for a while, it's not too early to speculate on what kind of SEC policy Mr. Trump's eventual appointees will pursue.

“We will probably see folks with some industry experience and a more deregulatory focus,” Norm Champ, former director of the SEC Division of Investment Management, said Friday on a client conference call sponsored by the law firm Kirkland & Ellis.

All three of the former SEC officials who work at Patomak have expressed skepticism about the SEC promulgating a rule that would raise investment advice standards for retail investment accounts.

When she was on the commission, Ms. Casey wrote a dissent to a 2011 SEC study recommending that the agency proceed with a fiduciary rule. During his commission tenure, Mr. Gallagher said he was not convinced a case had been made for a rule.

At a congressional hearing in 2015, Mr. Atkins called for the SEC to go first with a fiduciary rule, and that the Labor Department “should go back to the drawing board” with its own measure, which was finalized this year and will be implemented starting in April.

In his testimony, Mr. Atkins said investment advisers, who meet a fiduciary standard when providing advice, and brokers, who adhere to the less-stringent suitability standard when conducting product transactions, should be overseen differently.

“These two kinds of activities logically should have different standards of care — and costs — attached to them,” Mr. Atkins said in his prepared remarks.

No matter how the top of the SEC is shuffled, Mr. Champ said many SEC policies likely would continue because they're carried out by a staff of about 4,000 that doesn't change much when a new president takes office.

“The SEC is not subject to a wholesale turnover like Treasury is,” Mr. Champ said.

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