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News January 1, 2018 Issue

Peirce and Jackson Approved as SEC Commissioners

The SEC once again has a full set of commissioners. Hester Peirce and Robert Jackson were both approved by the U.S. Senate on December 21, returning the total number of commissioners to five for the first time since 2015.

The Senate on the same day also approved a new assistant secretary of Labor, Preston Rutledge, to head the Department of Labor’s Employee Benefits Security Administration. That role includes overseeing development of the DOL Fiduciary Rule and its exemptions.

SEC commissioners by tradition are divided between Republicans and Democrats, so that the Commission stays evenly split between the two parties, with the exception of the SEC chairman, who also sits on the Commission. The chairman is appointed by the President, which means that he or she is typically from the President’s party and therefore able to break ties that may develop among the four other commissioners.

"It’s great to see the SEC back up to its full complement of commissioners," said Willkie Farr partner and former SEC deputy chief of staff James Burns, "but it wouldn’t surprise me to see the number drop back to three early in the new year." That’s because the two other existing commissioners, Kara Stein and Michael Piwowar, are expected to leave. Stein’s term has already expired, but she was allowed to retain her seat until 2018. Piwowar’s term expires in 2018.

Trump would then need to appoint two new commissioners and they would need to be approved by the Senate. Once that occurs, Trump will have named all five members of the Commission.

"The Investment Adviser Association congratulates Hester Peirce and Robert L. Jackson Jr. on their confirmations last night as the SEC’s two new commissioners," said IAA president and chief executive officer Karen Barr. "We are pleased that the Commission will now, after more than two years, have a full complement of five commissioners. We look forward to working with chairman Jay Clayton and all of the commissioners on regulatory and investor protection initiatives that have a critical impact on investors, the markets, and the U.S. economy."

Peirce and Jackson were approved by the Senate Banking Committee November 1, but an expedited voice vote on their confirmation was held up by Senator Tammy Baldwin (D-WI), because she wanted further answers from the two nominees about hedge funds, stock buybacks and executive compensation rules. Peirce, the Republican nominee, has been a fellow at the George Mason University Mercatus Center. Jackson, the Democratic nominee, has been a professor at Columbia Law School.

Rutledge, who served as the Senate Finance Committee’s senior tax and benefits counsel since 2011, was approved for the EBSA position by the Senate Health, Education, Labor and Pensions Committee on December 13.

Other appointments

Clayton also made two appointments in December to further round out what his SEC will look like. On December 14, he named Kenneth Johnson as the agency’s chief operating officer. Johnson had been serving as acting COO since February 2017. He was previously the SEC’s chief financial officer, a post he held since 2010, and first joined the agency in 2003.

Marc Berger was named director of the SEC’s New York Regional Office on December 18, and is expected to assume his position this month. He has been the global co-head of law firm Ropes & Gray’s securities and futures enforcement practice. Prior to that position, Berger spent 12 years as an assistant U.S. attorney in the Southern District of New York.