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SEC Commissioner Piwowar Discusses Enforcement/Disclosure

On November 22, SEC Commissioner Michael Piwowar gave a speech before the Los Angeles County Bar Association Securities Regulation Seminar on his 100th day as an SEC Commissioner.  He noted the irony of the only non-lawyer member of the Commission addressing a bar association group. 

Commissioner Piwowar commended the impressive work of the SEC’s enforcement staff, stating that he had voted on more than 150 enforcement recommendations during his 100 days in office.  He stated that enforcement “supports all three parts of our core mission: protecting investors, maintaining fair, orderly, and efficient markets, and facilitating capital formation.”  Discussing the Commission’s broad enforcement powers, he encouraged careful consideration of the matters the Commission pursues, saying “[w]e cannot allow public outcry, agency morale, politics, or jurisdictional turf battles to be reasons for pursuing, or not pursuing and enforcement action.” 

Commissioner Piwowar expressed concern about the Commission’s current practice of delegating the authority to commence formal investigations to the Director of the Division of Enforcement, questioning the ability of the Commission to exercise oversight of the process as well as the public’s lack of opportunity to comment on the procedural change.

Commissioner Piwowar discussed the provision of the Dodd-Frank Act that allows the SEC to conduct investor testing without approval under the Paperwork Reduction Act, noting its importance particularly in the area of disclosure.  He stated, “[i]t is a far better approach to consideration of disclosure proposals to have empirical data, rather than rely exclusively upon the beliefs and opinions expressed in comment letters.”  He maintained that the Commission should use its ability for investor testing much in the same way that private companies use testing to determine how their products are received in the marketplace.  “We must determine whether our rules that require the delivery of important investor information in fact service the goals being articulated.  I hope that the Commission commits itself to a robust investor testing program that examines the efficacy of not only proposed rules, but our existing rules as well.”