Outgoing Securities and Exchange Commission Chair Mary Jo White made her decision to leave the agency before the Presidential election, according to testimony she gave in a final appearance before the House Financial Services Committee.

Chair White announced she was stepping down this week, effective at the end of President Obama’s term. Her term was not scheduled to officially expire until 2019.

White received wide praise from lawmakers during the nearly three-hour hearing, which addressed ongoing regulatory initiatives at the Commission ranging from oversight of the fixed income markets, the regulation of so-called robo advisors, small business’ access to capital markets, simplification of corporate disclosures to the SEC, and a proposed rule that would allow mutual fund providers to distribute documents electronically.

Rep. Brad Sherman, D-CA, urged Chair White to stay beyond her intended departure date, until her successor could be confirmed.

“The tradition is for the SEC Chair to resign when the new President takes over, but that tradition was developed at a time when we had a more efficient Senate and Congress that could quickly confirm your successor,” said Sherman.

White’s departure will also create a vacancy on the 10-member Financial Stability Oversight Council, the regulatory body created by the Dodd-Frank Act of 2010 that designates systemically important financial institutions. FSOC “should not have an empty seat,” said Sherman.

SEC fiduciary rule still a distant proposition

Rep. Ann Wagner, R- MO, a member of the Financial Services Committee who first sponsored legislation to block the Department of Labor’s fiduciary rule in 2013, pressed White for her perspective on the rule’s potential negative impact on retail investors.

Wagner cited recent announcements from Merrill Lynch and other advice providers that will limit investors’ options in IRAs.

“We’re all concerned about anything that results in depriving retail investors of reasonably priced reliable advice,” said White. “Markets do adjust to rules in ways that sometimes have effects that are not desirable.”

The Dodd-Frank Act authorized the SEC to explore the need to promulgate its own uniform fiduciary standard.

While White has publically supported such a rule, the five-member Commission under her tenure has been politically divided on its merits.

To date, SEC staff have only provided a detailed outline of how the SEC would approach its own rulemaking, which White said “is a very difficult thing to do well.”

“Our job is to coordinate as best we can (with the DOL rule) and provide relief if we have the authority to and if it makes sense to minimize impacts,” said White.

But that coordination with DOL’s rule will not advance anytime soon.

“I don’t think there is consensus to move this forward in the current commission,” said White. “This is a really hard, complex rule making. I think it is something important to do, but I am one vote. We are a commission of three,” she added, referring to two commissioner vacancies being held up in Congress.

The search for a new SEC chair

Chair White was appointed by President Obama and quickly confirmed by Congress in April of 2013.

During her tenure, the Commission brought more than 2,850 enforcement actions, more than any other three-year period in SEC’s history, and charged over 3,300 companies and 2,700 individuals, resulting in about $13.4 billion in monetary sanctions.

White was the first woman to be appointed the U.S. States Attorney for the Southern District of New York, and oversaw the prosecution of John Gotti and the terrorists responsible for the 1993 World Trade Center Bombing.

More recently, she litigated in private practice before her appointment to the SEC.

In one 2007 high profile case, she successfully defended a New York Times journalist against a defamation suit brought by President-elect Donald Trump, as was noted in Chair White’s final hearing by ranking member Maxine Waters, D-CA.

Chair White’s nominated replacement could be revealed in a matter of weeks, as the Trump transition team is fast at work parsing Cabinet nominations.

Paul Atkins, CEO of Patomak Global Partners, a compliance consultancy to the financial services industry, has been tapped to head the new administration’s search to replace White.

Atkins served as an SEC Commissioner from 2002 to 2008. In testimony before a 2015 House Financial Services Committee on Dodd-Frank, Atkins expressed concerns over the DOL fiduciary rule’s impact on small investors.

Of the rule, which was still being proposed, he said, “very few brokers will be able to receive commissions” under the fiduciary rule’s Best Interest Contract Exemption.

“This would be a tragic outcome for millions of small savers,” said Atkins.

Instant Insights /

SEC Chair Mary Jo White made decision to leave before election

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