SEC Commissioner Hester Peirce acknowledged that the agency “will see people leave” as the threat of staffing reductions looms, saying that “some of those departures are going to be very hard” for both her and the agency.
“At the same time, there’s really deep talent there,” Peirce said during a discussion at the Investment Adviser Association’s annual compliance conference in Washington, D.C. “We will do the best to shepherd and protect the folks who are there as they develop even deeper knowledge and expertise.”
In recent weeks, the commission offered “eligible employees” a $50,000 buyout to leave the agency by early April, according to Bloomberg.
Additionally, members of Elon Musk’s “Department of Government Efficiency” team were purportedly working inside the commission, and the General Services Administration was considering closing SEC regional offices in Chicago, Los Angeles and Philadelphia (though it remains unclear what buildings, if any, will eventually go up for sale).
During this morning’s conversation with IAA President Karen Barr, Peirce said some registrants might view the new administration (and SEC regime) as an indication that they can worry less about compliance requirements and do what they want.
She said this “would not be a wise attitude to take,” noting that rules on the books needed to be enforced and that while regulation guidance and examinations will be part of that solution, enforcement will always be part of it.
“You’re not doing anyone favors by taking that kind of attitude because the desire to work with industry is a desire to take a shared goal of getting compliance right, of getting the rule set right, of getting implementation right and working together toward that end. But if we think there are people who are not doing that in good faith, it really corrupts that whole effort.”
Barr noted that the commission’s leadership had drastically changed in the past few months, and advisors wondered if some of the proposed rules that were not finalized (including regulations on predictive data analytics, ESG for advisors and cybersecurity, among others) may be changed or rescinded.
While Peirce wouldn’t confirm nor deny that the rules would be revisited, she acknowledged that she and Acting Chair Mark Uyeda shared similar concerns about some of the proposals and also had previously worked with SEC Chair Nominee Paul Atkins.
“I’m not going to make predictions about what will be on Chairman Atkins’ agenda, but I would be very surprised if he just took Chair Gensler’s agenda and adopted it as his own,” she said. “So that’s as much comfort as I can give.”
Peirce also said she was frustrated by the commission’s previous approach to anti-money laundering rules and off-channel communications enforcement. She felt the former was unnecessary and duplicative of other requirements and wondered if a change in off-channel communications rulemaking was needed due to the breadth of technical violation changes brought by the commission.
“You can have a great compliance program in place,” she said. “You can do everything you can to make sure that people are complying, but there will be non-compliance probably because people are people.”
Later, Corey Schuster, a co-chief in the Asset Management Unit at the SEC’s Division of Enforcement, said that he felt the enforcement division had been clear about the subject of off-channel communications, and it was unlikely there’d be a large number of enforcement actions related to it (as there’d been in the past several years).
“Exams obviously may examine for off-channel communication issues,” he said. “But I think the message has been sent from enforcement.”