Commissioner Hester Peirce to Leave SEC in November

SEC Commissioner Hester Peirce announced she will leave the agency in November. Her departure will leave the Commission with two members. 

In remarks at the U.S. Chamber of Commerce Capital Markets Summit, Ms. Peirce offered her perspective on the proper limits of governmental power, generally, and of the SEC's authority under its statutes specifically. She stated that the SEC must confine itself to the powers Congress and the Constitution granted it, making clear that the agency had not always done so. Ms. Peirce pointed to recent SEC actions that are returning the agency to its proper statutory limits, including: (i) a recent decision to end an agency policy barring settling defendants from denying the allegations against them, which, she said, raised First Amendment concerns (see previous coverage ); (ii) a proposal to rescind climate-disclosure rules; (see previous coverage,) (iii) a joint proposal with the CFTC to amend Form PF for private funds (see previous coverage); and (iv) a concept release questioning the privacy and civil-liberties implications of the Consolidated Audit Trail (see additional coverage). Ms. Peirce also tied the SEC's crypto work over the past year and a half to the limits of the SEC's authority under the statutes it administers.

Ms. Peirce also identified areas that, she warned, still exceed the agency's authority. She questioned the constitutionality of the investment-adviser pay-to-play rule, saying it functioned as a restriction on political speech. She criticized the SEC's expansive reading of the Foreign Corrupt Practices Act's internal-accounting-controls provision, and its position that negligent conduct could violate the antifraud prohibitions in the Advisers Act, a reading that wrote intent out of the definition of fraud. She also expressed significant doubts as to the basis for the SEC's view that it could require wrongdoers to disgorge amounts that were greater than the profits they had received.