Confirmation quagmire mustn't deter SEC

The likelihood of the two SEC nominees being confirmed anytime soon is slim, and getting harder to imagine by the day. But the commission has too much important work to tackle to let that hold them back. Even before the sudden death of Supreme Court Justice Antonin Scalia on Feb. 13, no date had been set to consider the White House appointments of Republican Hester Peirce and Democrat Lisa Fairfax to fill the open positions on the Securities and Exchange Commission. The last peep on timing came from Senate Banking Committee Chairman Richard Shelby, R-Ala., in January, before the Supreme Court dustup, when he told Politico that he didn't anticipate moving nominees until after his March 1 primary.

RETALIATORY BLOCKAGES

But with the political battle sparked by Mr. Scalia's death, revolving around whether the Senate will consider candidates to fill that important vacancy, trying to move other federal appointments through the system could prove impossible. Even nominees that both sides of the aisle could agree on may provide fodder for retaliatory blockages in a partisan Congress, as Washington reporter Mark Schoeff Jr. said in a recent article on the matter. Two more logjams were spotted last week. Republican leaders un-equivocally declared they will not even meet with a possible Scalia replacement. Add to that the other appointments waiting in the wings, especially those before the Senate Banking Committee. Democrats on that committee sent Mr. Shelby a letter last week about the 16 nominations now pending before it, including the two SEC candidates. Authors of the letter said the chairman has stated he will not proceed on any appointments until President Barack Obama appoints a vice chairman for supervision at the Federal Reserve. So the question remains: Given the SEC will likely be down two commissioners on the five-person panel for quite a while, what are the chances it will take action on pressing issues? SEC Chairwoman Mary Jo White assured the crowd at a Practising Law Institute conference on Feb. 19 that her commission isn't sitting on its hands waiting for Congress to act: “At the moment, as you know, we are a commission of just three members, but — as has occurred in the past — we can carry forward all of the business of the commission,” she said. “And, while we look forward to welcoming new colleagues, Commissioners [Kara] Stein, [Michael] Piwowar and I are fully engaged in advancing the commission's work.” Still, it's no surprise advisers and other industry players are skeptical the commission will move on important — especially, controversial — issues such as a wider fiduciary duty for all retail advice or even third-party adviser exams. The commission has been reluctant in the past to tackle the biggest issues without strong support from five bipartisan members. But the top securities regulator must not hesitate in getting on with its important mission. On the issue of third-party exams, how long should investors have to wait for their advisers to be examined? Every 10 years or so? We applaud the SEC's effort to shift internal examiners toward this effort and use part of its budget increase to hire more. But running the numbers, as we did in an editorial a couple of weeks ago, shows this will result in only slight progress toward the commission's larger goal of examining RIAs every two or three years. It's time to act on third-party examinations. As for a fiduciary duty for all retail advice, the ball is rolling. The Labor Department put it in motion for retirement accounts, and it's rare that advisers work only with a client's retirement or taxable account. Squaring one adviser's duty to one client sitting across the table is inevitable. The SEC can't sit on the sidelines as this evolution happens. Whether at three members or fully staffed, the commission must move ahead unrelentingly with its three-part mission, a key facet of which is protecting investors.