As widely reported, former SEC Commissioner Paul Atkins (2002-2008) is to be nominated to serve as SEC Chair. This WSJ op-ed describes him as the “anti-Gensler”—the “opposite of Mr. Gensler in temperament and regulatory ambition.” According to Politico, “Atkins has been an outspoken critic of everything from the financial reform measures enacted after the 2008 credit crisis to climate-related disclosures.” Further, Politico reports, “Atkins has sharply criticized what he considers heavy-handed policymaking for the last two decades. And he is seen by many in Washington as a well-connected regulator whose understanding of the SEC could allow him to move quickly as he enacts his vision for the regulator.” If he is confirmed, Politico continues, he “would be tasked with steering the SEC as it embarks on what is expected to be a new deregulatory age for Wall Street after nearly four years of aggressive rulemaking by the current chair, Gary Gensler. He would also be thrust into a series of policy fights over the $3 trillion cryptocurrency market, artificial intelligence and the cost of raising capital in the U.S.”
While the NYT and other media have focused on his “strong advoca[cy] for looser regulation of crypto assets” and rules that are more tailored for crypto, there’s a lot more to it. As the WSJ reports, he is also viewed as “a regulatory skeptic who will be expected to cut red tape and rein in the agency’s enforcement division.” Politico reports predictions from financial industry lobbyists “that the next SEC chair will seek to lower the guardrails around going public in the U.S. as well as to invest in privately held companies.” While Atkins “isn’t expected to dismantle core investor protections,” the WSJ maintains, he “is likely to re-examine or revise much of what the agency did during the Biden administration.”
According to Politico, Atkins was a “noted skeptic” of Dodd-Frank. In testimony before Congress, the WSJ reports, he took the position that Dodd-Frank “invested too much authority in regulators to decide how to restrain risk-taking at big banks.” Politico observes that he “has argued that corporate penalties harm both shareholders and employees.” The WSJ reports that, in 2006, “Atkins supported a set of SEC guidelines that suggested sparing use of penalties against public companies. He favors suing individual wrongdoers instead, arguing that forcing companies to pay fines hurts shareholders.” Politico quotes a former regulator and colleague, who said that Atkins “‘genuinely loves this shit….He loves thinking about it. He loves talking about it.’”
He’s apparently not much of a shareholder proposal fanboy. According to this 2016 article in Politico, Atkins views the shareholder proposal process as a “megaphone of free publicity….Over the years, the SEC’s rules have been changed to benefit social activists, and that needs to swing back, he said…. ‘Because right now the rules have really drifted way off to one side like I said between co-opting and disenfranchising. So I think it is going to have to be radically changed back.’ Labor unions will resist the rule changes, Atkins said. As their memberships decline, the unions are well aware of the tactical value the shareholder process gives them. ‘This is their last power,’ he said.” [Emphasis added.] The same article also reported that Atkins has “railed against” environmentalists, among others, “for challenging public companies through shareholder activism. He has called companies ‘weenies’ who often ‘cave’ to social activists.” At a Heritage Foundation event in 2012, the article reported, Atkins contended that the goal of these environmental groups and others has been “to put pressure on corporations through the shareholder proposal process.”
At a 2022 PLI program (based on my notes), SEC Speaks, Atkins provided some acerbic side commentary on presentations and discussion led by SEC staff, which just might provide some further insight into his views. Let’s just say that his perspective on current trends was, hmmm, distinctly at odds with the zeitgeist currently prevailing at the SEC. When the Corp Fin director discussed Corp Fin’s active agenda and heavy workload, including the then-recent climate disclosure proposal, Atkins added that, from his perspective, the new climate proposal represented a “takeover of Reg S-K by ESG.” He also inquired whether the staff had taken into account SCOTUS’s new decision in West Virginia v EPA? (The director replied that they had in fact given a lot of thought to the implications of the case on the proposed climate rule.) Atkins later also rejected the SEC’s goal of providing “decision-useful” information to investors. He advocated elimination of the term. “Decision-useful” is not equivalent to “material,” he said, and the SEC’s authority is to require “material” information, perhaps raising a nondelegation issue. (And that’s a potentially hot topic currently before SCOTUS. See this PubCo post.) To a panelist’s discussion of the cybersecurity disclosure proposal, Atkins inquired about the potential national security concerns regarding the disclosure mandate—had the staff consulted with other government agencies about this issue? (The answer was yes.) As another panelist discussed emerging risks, Atkins took the opportunity to comment on the stunning growth of risk factors disclosure since the requirement was first initiated during his tenure. There seemed to be a lot of risk factor disclosure about “fanciful risks,” he said, and companies were providing an increased level of detail. He advocated restoring the original concept. With regard to shareholder proposals, Atkins inquired about the number of exclusions permitted under no-action responses, given that the SEC had “eviscerated the exclusions.” On the proposal regarding beneficial ownership reporting, the filing deadlines and definition of a “group,” Atkins expressed concern about “cabals” of institutional investors advocating changes related to the environment, but indicating that they had no control intent and filing a Schedule 13G. (The panelist agreed that 13G was inappropriate where the beneficial owner had control intent and referred to a recent enforcement action involving a de-SPAC transaction.) (See this PubCo post.)
As for his philosophy, it may be reflected in his remarks at a Federalist Society event in April, as reported by Politico. Atkins said “that a change in administration would likely also mean a move to undo some of the rules enacted under Gensler. But Atkins added that he hoped the SEC would ‘get beyond that,’ too. ‘The SEC, CFTC or whatnot can look at its own patch, but it can’t really change the world….There are certainly enough societal and economic problems that need to be addressed. I think the agencies have got to figure out what is the highest and best use for them, and let Congress and others figure out what the public policy should be.’”
The WSJ has previously reported that Atkins headed up the 2016 transition effort concerning the SEC and other financial regulators. And it will be old home week for current Commissioners Hester Peirce and Mark Uyeda—both served as Atkins’ counsel when he was a Commissioner.
