Senate Banking Committee Holds Confirmation Hearing for SEC Nominee Paul Atkins

On March 27 the Senate Banking Committee held a hearing to consider the nomination of Paul Atkins to serve as the next Chairman of the Securities and Exchange Commission (SEC). In his written testimony, Atkins noted that regulation should be “smart, effective, and appropriately tailored within the confines of the regulator’s statutory authority… clear rules of the road benefit all market participants.” His testimony emphasized that the role of the SEC should be to facilitate well-designed regulation, analyze effectiveness of regulation, and utilize the SEC’s enforcement arm to challenge illegal behavior. He added that “[u]nclear, overly politicized, complicated, and burdensome regulations are stifling capital formation, while American investors are flooded with disclosures that do the opposite of helping them understand the true risks of an investment.”

In his opening remarks, Committee Chairman Tim Scott (R-SC) noted that an Atkins will “roll back the Biden administration’s disastrous policies, promote capital formation and retail investment opportunities, and provide long-overdue clarity for digital assets…” The hearing covered a variety of topics including the PCAOB, the 2008 Financial Crisis, private funds, tariff policy, the collapse of FTX, ESG investing, the Consolidated Audit Trail, and private credit assets in ETF products. Senator Jack Reed (D-RI) discussed his concerns with the recent launch of an ETF that contains what he referred to as “very risky” and “illiquid” private credit assets. He expressed concerns and wondered what protections should be in place to protect retail investors. Atkins noted that ETF and other registered products have certain diversification and liquidity requirements to ensure “one investment does not take the whole thing down.” Atkins also noted there is an internal review process that funds must submit to in order to launch a product like the one the Senator referred to. In remarks made in response to Senator Angela Alsobrooks (D-MD), Atkins noted that there will not be political influence of the staff when he leads the Commission.

At the end of the hearing, Chairman Scott expressed his desire to move Atkins’ nomination along quickly. It is likely that the Committee will schedule an Executive Session to vote on his nomination in the next couple of weeks; and that Senate floor time permitting, Atkins will likely advance along a mostly party-line vote.

Click here to view an archived video of the hearing.
Click here to read Atkins’ written testimony.