Senators Request SEC Inspector General Investigate Acting Chairman’s Moves to Reconsider Dodd-Frank Rules and Weaken Agency Enforcement

Senators Request SEC Inspector General Investigate Acting Chairman’s Moves to Reconsider Dodd-Frank Rules and Weaken Agency Enforcement

Unilateral directive essentially shelves Menendez-authored requirement to disclose pay difference between CEOs and average workers

 
WASHINGTON, D.C. – U.S. Senator Bob Menendez (D-N.J.), a senior member of the Senate Banking Committee, joined Elizabeth Warren (D-Mass.), Brian Schatz (D-Hawaii) and Sherrod Brown (D-Ohio) today in a letter to the Inspector General of the Securities and Exchange Commission (SEC) requesting an investigation into recent actions taken by Acting Chairman Michael Piwowar to reconsider congressionally-mandated Dodd-Frank rules and to scale back the investigative powers of the agency’s enforcement staff.

The senators expressed concern that Piwowar’s actions “may lack adequate justification, undermine the SEC’s mission, exceed his authority as Acting Chairman, violate other procedural requirements, and could potentially prove to be a waste of the SEC staff’s precious time and resources.”

On January 31, within a week of his temporary appointment, Piwowar directed SEC staff to reexamine 2014 guidance regarding conflict minerals coming from the Democratic Republic of Congo. On February 6th, he reopened for public comment the final "pay ratio" rule that compels publicly traded firms to reveal how their executives' compensations compare with the salaries of rank-and-file employees. In addition, Piwowar has unilaterally acted to reverse policies that strengthened the SEC's investigative powers following the financial crisis.

“Commissioner Piwowar’s personal distaste for a congressional mandate is not sufficient grounds to attempt to weaken a final rule that has been approved by the SEC,” wrote the senators.  “We are also concerned that Commissioner Piwowar appears to have directed the agency staff...before consulting with his only fellow Commissioner and seeking her approval.” The senators asked the IG to investigate his actions to “determine whether they are legally permissible and in keeping with the SEC’s core mission.”

During questioning last week by Sen. Menendez, President Trump’s nominee for SEC Chair, Jay Clayton, refused to say if he agreed with Piwowar’s action to re-open the comment period on the CEO-to-worker pay ratio disclosure rule.  Menendez also led a letter to Acting Chair Piwowar calling on the agency to stop delaying the implementation of the CEO-to-worker pay ratio rule that was adopted 18 months ago.

A PDF copy of the senators’ letter is available here.