President-elect Donald Trump’s appointees to the SEC have repeatedly voted against punishing large companies and, when he was the agency’s top executive, have scrutinized the agency’s enforcement process, according to public records and former SEC lawyers. He was extremely critical of. his leadership.
Paul Atkins has been involved in at least 10 enforcement actions punishing individuals and companies, including Citigroup and IBM, according to a Reuters review of records from 2002 to 2008, the last of his tenure as a Securities and Exchange Commission commissioner. Voted no. In doing so, he rebelled against his fellow Republican agency chairs.
Mr. Atkins was also a clean freak, scrutinizing every word of proposed enforcement actions and frequently pushing back against SEC officials who recommended prosecution, according to three former SEC enforcement officials. Atkins made no secret of his distrust of many of the SEC’s processes for investigating and punishing rule-breakers, saying at the time that fines on companies unfairly penalize shareholders and that the SEC would not allow individual fraudsters to act. He argued that the focus should be on He became well known for his pro-industry views even as the agency was dealing with the fallout from the Enron and WorldCom accounting scandals.
But previously unreported dissenting opinions about his execution, as well as Reuters interviews with more than a dozen former SEC officials and academics, provide insight into how deep that skepticism runs. They suggest Wall Street is having a much easier time after years of aggressive enforcement under Democratic Chairman Gary Gensler, in which the SEC has imposed more than $20 billion in fines and other charges. There is.
Notable companies whose SEC lawsuits could be affected by new leadership include electric car maker Tesla, crypto exchanges Coinbase Global and Binance, and investment firms BlackRock, Carlyle, and TPG. Included.
Under Mr. Atkins, the SEC is likely to focus on misconduct that directly results in losses to investors, such as fraud, rather than corporate misconduct where the damage is not always immediately obvious, the people said. Critics argue that such an approach is dangerous because large companies pose systemic risks and can cause large losses to investors.
“His appointment will increase the stress levels of compliance staff and the heart rate of those around them,” said Tyler Gerash, a former SEC official who now heads the Health Markets Institute, which focuses on increasing transparency and reducing conflicts of interest in capital markets. It should go down,” he said. Members also include pension funds.
Atkins did not respond to requests for comment. Although he has said little about enforcement in recent years, he continues to advocate for less oversight and represents companies in regulatory disputes through his consultancy, Patmac Global Partners.
A spokesperson for the Trump administration did not respond to a request for comment.
10 objections
The SEC’s leadership is comprised of five politically appointed members, including the chairman, who vote on rules and enforcement actions. Typically, the chair votes when a bill has enough support to pass.
During Mr. Atkins’ tenure, commissioners sometimes revealed how they voted on regulatory issues, but neither commissioners nor the agency routinely made public the results of enforcement votes, and commissioners’ entire records are It was hidden from the public eye.
Reuters examined online voting records from Atkins during his tenure, but only available for 28 months from 2006 to 2008. This record pertains to administrative enforcement actions filed in the SEC’s internal courts, but not to litigation in federal court.
Atkins issued 10 dissents, disapproving of the action more than twice as many as Democratic Commissioner Roel Campos, while Democrat Annette Nazareth and Atkins’ fellow Republican Kathleen Casey There was no opposition on enforcement issues during the same month. Mr. Campos, Mr. Nazareth and Mr. Casey did not respond to requests for comment.
In today’s partisan atmosphere, where partisan SEC dissent is not uncommon, Atkins’ willingness to disagree with his fellow Republicans on enforcement issues is surprising and shows how strongly he feels about the issue. Experts said that it highlights how much people have.
“Atkins is an independent thinker with clear views about how markets work,” said Joseph Grundfest, a Stanford University professor who served as a Democratic committeeman in the 1980s. Jay Clayton, who served as SEC chairman during Trump’s first term, was similarly skeptical of fines for large companies, focusing primarily on fraud on small investors. But the agency remains active, issuing record fines in 2020 and surprising some onlookers with landmark charges against Tesla and cryptocurrency company Ripple.
Atkins’ 10 dissents were among the thousands of votes he was supposed to cast, but former agency officials say they accurately reflect his tough approach to enforcement issues. He said he is doing so.
Former SEC Assistant Secretary of State for Enforcement Gregory Faragasso praised Atkins’ acumen and expertise, saying, “He put us through our paces.” “He’s going to want to really dig into certain issues…You really have to know your stuff.”
Two other former officials shared similar views. One person said Mr. Atkins negotiates corporate fines with employees, often asking them to focus on fines for individuals rather than companies.
Mr. Atkins voted against a $7 million SEC settlement with IBM over accounting and other issues and opposed a 2008 order against Citigroup over financial statements. He also objected on smaller issues, such as the prosecution of unregistered accountants.
Atkins’ argument is not recorded in the document, but he argued in parallel remarks that fines against companies would only hurt shareholders who had already been harmed by the original wrongdoing.
He also claimed that enforcement officers often pursued minor violations, suggesting in a 2008 speech that enforcement officers did so to inflate the number of enforcement officers, and that enforcement officers often pursue minor violations. He claimed there was no transparency about the evidence he had.
“Enforcement action is necessary where there are serious violations, but the goal should be to work with companies to build internal compliance,” he said.
issued – January 8, 2025 3:08pm IST
