Outgoing SEC Chair White Urges Successors to Maintain “Fierce Independence”

Outgoing SEC Chair Mary Jo White asserted that the SEC must be “ready to use the full array of tools available” if it is to remain a strong market regulator. She argued that the SEC should not rely “on disclosure and enforcement alone” and that the SEC must maintain a “fierce independence in applying our expert, best judgment to protect investors, to maintain fair, orderly, and efficient markets, and to facilitate the formation of capital by the companies whose innovation and growth drives the American economy.”

In a speech before the Economic Club of New York, Chair White described progress in a number of areas during her tenure including developments in fund liquidity, equity market structure, financial responsibility for broker-dealers, and public disclosure. She asserted that regulators “must recognize and address the interrelationships between financial institution and market, appropriately calibrated to both protect investors and support the risk-taking that is at the heart of our capital markets,” and claimed that the Financial Stability Oversight Council is a “particularly important forum” for sustaining and strengthening those interrelationships.

Chair White stated:

“At the core of being a good steward of the mission of the SEC is acting independently from the executive and legislative branches of government, fighting for that independence whenever necessary, and withstanding the inevitable criticism and pressure to change that follows.”

Chair White concluded that the “agency’s independence has been critical in allowing it to use its expert judgment to do what is best for investors and the markets – a task that could otherwise be rendered impossible by the whims of political pressure or the public mood.” She observed “[p]erhaps a bit paradoxically,” that this independence depends on regular oversight from a wide range of constituents with vastly different perspectives. Chair White highlighted trends that she felt were pushing against it, such as “highly prescriptive mandates,” and “legislative proposals from Congress seeking to remake [the SEC’s] rulemaking process.”

Lofchie Comment: The substance of Chair White’s advice and commentary seems Delphic. Is she telling her successors to be independent of the new administration of the President-elect, or is she articulating her stance toward Senator Elizabeth Warren’s various attacks? (See SEC Chair Mary Jo White to Step DownSenator Urges President to Replace SEC ChairSenator Warren Calls on SEC to Justify Disclosure Effectiveness Initiative.)