Two SEC commissioners nominated

President Barack Obama nominated Democrat Lisa Fairfax and Republican Hester Peirce on Tuesday to fill two commissioner seats on the five-person Securities and Exchange Commission. Ms. Fairfax, an expert on shareholder activism, corporate governance and securities, is a professor at George Washington University Law School. Her 2011 book “Shareholder Democracy: A Primer on Shareholder Activism and Participation” describes efforts to ease and increase corporate shareholder voting power. According to reports in Reuters and the Wall Street Journal, Ms. Fairfax's name was circulated on a list of nominees by Sen. Elizabeth Warren, D-Mass., after the Obama administration came under fire by liberal activists over its initial consideration of a corporate lawyer who represented a number of financial institutions.

Left: Lisa Fairfax; Right: Hester Peirce.

Ms. Peirce, a vocal opponent of Ms. Warren's financial regulatory agenda, is a research fellow at the Mercatus Center at George Mason University and a veteran of the SEC, having worked there from 2000 to 2008. Before Mercatus, she served as an aide on the Senate Banking Committee. She edited and contributed to the 2012 book “Dodd-Frank: What It Does and Why It's Flawed,” on the function and perceived failings of the post-fiscal-crisis law. “I certainly think [Ms. Peirce] has a keen appreciation for the mission of the agency and the challenges that it faces,” said Neil Simon, vice president for government relations for the Investment Adviser Association. Mr. Simon called Ms. Fairfax “more of an unknown,” but noted her strong academic credentials and extensive work in corporate governance as being positive attributes for an SEC commissioner. Both nominees currently sit on the SEC's Investor Advisory Committee established by the Dodd-Frank Act to advise the commission on regulatory priorities of investors. A DIVIDED SEC In recent years, the partisan divide on the SEC, has caused commissioners to be at odds over enforcement policy and regulation initiatives. Disagreements over issues such as enacting Dodd-Frank initiatives and whether to file charges against Wall Street corporations and individuals have caused delays and split votes on the commission. Barbara Roper, director of investor protection at the Consumer Federation of America, notes that while the Republican members of the SEC have stood relatively united, the Democratic commissioners' stances on the issues have been more fractured. “It's hard to see how the commission could be more divided than it is,” Ms. Roper said. “We hope that Lisa Fairfax has the magic touch that brings the Democrats together.” Ms. Roper expects Ms. Peirce to be “energetic, effective in advocating her agenda.” Ms. Roper added, because of her own work as an advocate of market regulation, “it is unlikely to coincide with my agenda.” FIDUCIARY DUTY RULE Neither nominee has taken a public stance on the fiduciary duty rule. However, judging from the position Ms. Peirce took when working on Section 913 of Dodd-Frank, Ms. Roper expects she would be skeptical. “And what matters on fiduciary duty is a real understanding of what the rule needs to look like to really strengthen protection for investors,” Ms. Roper said.