Press Releases

Waters Discusses New Waiver Proposal with SEC Chair

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Washington, DC, March 24, 2015 | comments

In remarks prior to testimony from Securities Exchange Commission (SEC) Chairwoman Mary Jo White, Congresswoman Maxine Waters (D-CA), Ranking Member of the Financial Services Committee, discussed her recently released draft legislation, the “Bad Actor Disqualification Act.” The proposal would increase transparency by establishing a more vigorous, fair and public process for granting waivers of bad actor disqualifications at the SEC. The measure, which already boasts the support of labor, consumer and financial reform groups, would also move waiver consideration from the staff level to the Commission level, provide the public a notice and comment period, and require SEC to keep complete, public records.

During her remarks, the Ranking Member underscored her concern about the current waiver process and discussed her support for full funding for the SEC. In addition, she mentioned the need for a strong fiduciary standard among regulators to protect investors and retirees. Moreover, she urged the Chair to preserve the important role of state regulators in advance of the Commission’s vote tomorrow on "Regulation A+," a rule to allow small businesses to raise funds in a streamlined offering.

Full text of the opening remarks is below:

“Thank you, Mr. Chairman and welcome Chair White.

Chair White, the SEC has a lot on its plate as it works to protect America’s investors, young and old. That is why my Democratic colleagues and I support full funding for the Commission.

Chair White, I am pleased that you support a harmonized Fiduciary Duty rule that will protect America’s investors and retirees. But the devil is in the details, and we must take care not to weaken existing protections in pursuit of a uniform standard. I would also emphasize that while SEC and Department of Labor coordination is important; it is crucial to recognize that the two agencies have different jurisdictions and mandates.

I share your view that policing a fiduciary rule is vital. However, I support the approach endorsed by the former Republican Chairman and Democrats of this Committee, industry associations, and advocates: to simply pay for more SEC examiners with a modest fee on advisers.

Turning to another retail investor concern, tomorrow the SEC will vote on a rule allowing our small businesses to raise funds in a streamlined offering, known as “Reg A plus.” I’d like to reiterate that when Congress passed this provision, we rejected the preemption of state regulators because they have vital expertise in policing these smaller issuances.

Finally, as you and I have discussed, I am concerned with the SEC’s seemingly reflexive process of granting waivers of bad actor disqualifications. Currently, every publicly available waiver application has been granted, with large financial firms receiving the vast majority.

This morning I released draft legislation to address this problem, by requiring the SEC to implement a more rigorous – and more public – process for granting waivers. The “Bad Actor Disqualification Act” would no longer allow the SEC to consider waivers at the staff level, would provide the public a notice and comment period, and would require SEC to keep complete, public records. Already, labor, consumer and financial reform groups have expressed their support for the measure.

Chair White, I look forward to working with you on additional steps that the SEC can take to best deter bad actors in the marketplace.

Thank you, I yield back.”


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