By Mark S. Nelson, J.D.
The Senate confirmed Elad Roisman to be an SEC commissioner. Roisman, who will return to the SEC where he had previously served in an advisory role, was nominated by President Trump in June and was reported favorably by the Senate Banking Committee by voice vote. The Senate vote to end debate on his nomination, however, drew 14 “No” votes, including Senate Democratic Leader Charles Schumer (D-NY), Sen. Elizabeth Warren (D-Mass), and Sen. Dianne Feinstein (D-Calif). But Sen. Sherrod Brown (D-Ohio), Ranking member of the Senate Banking Committee, joined those voting to approve Roisman, who was confirmed by a final vote of 85-14.
Return to the SEC. Roisman most recently was chief counsel for the Republican majority on the Senate Banking Committee. Previously, Roisman was counsel to former SEC Commissioner Daniel Gallagher and chief counsel at NYSE Euronext.
All four current SEC commissioners issued a statement welcoming Roisman to the Commission. “We are confident Elad will make a substantial contribution to our mission on behalf of American investors.”
Senate Banking Committee Chairman Mike Crapo (R-Idaho) told members ahead of a vote to end debate on Roisman’s nomination that Roisman would uphold the SEC’s tripartite mission as well as the agency’s enforcement objectives. The senator cited remarks by Roisman during his confirmation hearing.
According to Senator Crapo, “He [Roisman] stressed the need to promote investor confidence in both the markets and the SEC itself and the importance of dispelling the perception that markets are inaccessible or rigged against the little guy.” Senator Crapo continued: “He committed to ensuring that the SEC has a strong enforcement program—one that holds regulated entities and individuals accountable. Elad also emphasized that the SEC must listen to small business owners and investors, many of whom do not make it to Washington regularly, whose perspectives are incredibly important to the SEC’s work and its continued improvement of capital markets.”
Rollbacks and process objections. Senator Feinstein spoke in opposition to Roisman’s nomination on behalf of a group of Democrats and cited departures from Senate procedure and Roisman’s role in helping to enact the Economic Growth, Regulatory Relief, and Consumer Protection Act (Pub. Law No. 115-174), which became law in May 2018. The legislative package eased rules for community banks, while also aiding some larger banks. The legislation contained few securities provisions, but a provision altering the definition of “covered securities” under Securities Act Section 18 was one of the most significant provisions along with provisions that eased requirements for the use of Regulation A, brought U.S. territories within the Investment Company Act, and allowed closed-end companies to use the offering and proxy rules for operating companies.
“As the majority chief counsel for the Senate Banking Committee, Mr. Roisman was instrumental in developing legislation that rolled back essential rules put in place after the financial crisis to protect consumers and help prevent another crisis from occurring,” said Sen. Feinstein. “According to the nonpartisan Congressional Budget Office, passing that legislation into law has increased the probability that a large bank will fail or that another financial crisis will occur.”
With respect to the Senate’s process, Senator Feinstein said senators should have waited to move forward on the Roisman nomination until President Trump nominates a Democrat to replace Commissioner Kara Stein whose term expired in June 2017. According to the senator, it is standard practice to nominate SEC commissioners in bipartisan pairs. Senator Feinstein said she worried that a deviation from Senate practice could allow a president to “stack” an independent agency with partisan allies. By contrast, the Senate recently confirmed two CFTC commissioners where the Republican nominee’s vote had been postponed for over a year while the Administration searched for a Democratic nominee.
The Commission is, by statute, a 3-2 commission with no more than three members allowed to be from the same political party. The Commission currently has two Independents, Chairman Jay Clayton and Commissioner Robert Jackson, one Republican, Commissioner Hester Peirce, and one Democrat, Stein. Chairman Clayton and Commissioners Jackson and Peirce were appointed by President Trump, while Commissioner Stein was appointed by President Obama. Stein is expected to step down by the end of 2018.