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News September 11, 2017 Issue

New SEC Takes Shape with a Flurry of Nominations and Appointments

They weren’t the first new SEC names since the Trump administration took office, but the commissioner nominees and staff appointees named in recent days have perhaps provided the best indication yet of what the agency under chairman Jay Clayton will look like and the direction it may take.

On August 31 alone, President Trump nominated a new SEC commissioner, Robert Jackson, and Clayton appointed directors for both the Division of Investment Management and the Division of Economic and Risk Analysis, as well as filled out much of his executive staff. Jackson’s nomination follows by a month Trump’s nomination of Hester Peirce. Both need to be confirmed by the Senate. Once confirmed, they will bring the Commission to full five-member strength.

But only for a short while. The two existing commissioners, other than Clayton, have only a short time left on the Commission, noted Kirkland & Ellis partner and former Division of Investment Management director Norm Champ. Kara Stein’s term has already expired, but she can continue in her seat into 2018, while Michael Piwowar’s term expires next year.

Assuming that Jackson and Peirce take about six months to be confirmed, that will leave relatively little time for a full Commission to operate, Champ said. "Then we’ll be back where we started this year, with only three commissioners in place."

It should also be noted that if Trump moves quickly in nominating two more commissioners in 2018, who are then approved by the Senate, the full five-member Commission will have been appointed by Trump.


Once on board, the Commissioners and the SEC staff will face a variety of issues,

"Clayton and the Division of Investment Management have several pressing matters to consider in the very near future," said Ropes & Gray counsel David Tittsworth. "Now that Clayton has largely completed appointing his senior staff, it is likely that his regulatory agenda for asset management firms will begin to take shape."

For example, he said that the Investment Company Institute "is actively seeking to delay the December 1 deadline for certain mutual funds and exchange-traded funds complexes under the Liquidity Rule. Ultimately, the ICI is seeking to do away with the classifications required under the Rule. Given the mandates of the Administrative Procedures Act for notice and comment, any changes to the rule must begin very soon if the SEC will be able to amend the rule before December 1."

Beyond that, Tittsworth said that "another issue that may appear on Clayton’s agenda is whether to re-propose a derivatives rule. While the current proposed Derivatives Rule was criticized on many fronts, both Piwowar and the ICI have stated that they strongly support action in this important area. I would not be surprised to see this issue appear on Chairman Clayton’s regulatory agenda at some point."

Nominees and appointees

Let’s take a look at some of the recently named individuals and what their new roles at the SEC might mean.

  • Robert Jackson and Hester Peirce. Jackson, the Columbia University law professor, was nominated by Trump to fill a traditionally "Democratic seat" on the Commission. He is known to be a backer of public disclosure of companies’ political spending. Peirce, nominated by Trump on July 19 for the "Republican seat," is a director at George Mason University’s Mercatus Center. She had been nominated to the SEC by Obama in 2016, but the nomination was not acted on by the Senate. The Senate banking committee approved her nomination, although Democrats there objected to her nomination when she took a position that some saw as being against corporate public disclosure – a position that may now put her at odds with her fellow nominee, Jackson. Champ suggested that "Jackson and Peirce will both bring more of an analytical background, rather than an industry background, to the Commission."
  • Dalia Blass. In naming Ropes & Gray partner Dalia Blass as the Division of Investment Management’s new director, Clayton brought a former SEC staff member back into the fold. She had previously served as assistant chief counsel at the Division, as well as in a number of other leadership positions there. While at Ropes & Gray, she specialized in matters involving investment funds, private equity and regulatory matters, the agency said. "I worked a lot with Dalia when she was assistant chief counsel," said Champ. "She is a very smart person; up to date on the securities laws. . . . Her main area of focus was exemptions and exchange-traded funds," areas that he said he hoped she would continue to focus on as director. "I’m very optimistic about what’s coming up." Mayer Brown partner Stephanie Monaco said she knew Blass from a professional group both belonged to, and described her as "substantively knowledgeable, politically astute and pragmatic," adding that "I hope she takes a deregulatory approach that will make rules easier to comply with." Tittsworth, who worked with Blass at Ropes & Gray for the past year, described her appointment as "exceptional. She has a proven track record as a securities lawyer and as an influential staffer at the SEC."
  • Jeffrey Harris. With the SEC’s increasing reliance on data analytics, the Division of Economic and Risk Analysis has become an increasingly important part of the agency. In naming Harris, currently a professor at American University’s Kogod School of Business, as the Division’s next director, Clayton noted his "extensive research of securities and commodities issues, and experience in government, academia and the private sector." DERA relies on a variety of academic disciplines, quantitative and non-quantitative approaches, and knowledge of market institutions and practices, the agency said. Prior to his current position at American University, Harris served as chief economist at the CFTC, and also worked as a visiting academic at the NASDAQ and at the SEC.
  • Executive staff. Clayton on August 31 also named seven members of his executive staff, joining five others named earlier. Four of the seven share the title of senior adviser to the chairman. They are John Cook, who will be advising Clayton on matters involving the Division of Investment Management, the Division of Economic and Risk Analysis, the Office of the Chief Accountant, and who will assist on enforcement; Jeffrey Dinwoodie, who will be advising Clayton on matters involving the Division of Trading and Markets, the Office of Compliance Inspections and Examinations, and who will assist on enforcement matters; Raquel Fox, who will be advising Clayton on matters involving the Division of Corporation Finance and the Office of International Affairs, as well as assist on enforcement; and Kristina Littman, who will advise Clayton on matters involving the Division of Enforcement, as well as assist on other regulatory and policy matters. The three other new appointees are Alan Cohen, senior policy adviser, who will advise Clayton on emerging risks and regulatory developments; Christopher Carofine, director of communications; and Shelby Begany Telle, confidential assistant. Executive staff positions previously filled were chief of staff, deputy chief of staff, chief counsel, managing executive, and senior adviser to the chair for cybersecurity policy.