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SEC Chairman White to Leave Agency, Opening Door to Conservative Shift

Move creates uncertainty as agency would have two of five commissioner seats filled after departure


Securities and Exchange Commission Chairman Mary Jo White plans to step down in January. The move portends a significant shift at the SEC, which has for six years focused on tightening regulations required by the Dodd-Frank Act. Photo: Reuters

By Dave Michaels
Nov. 14, 2016 5:00 p.m. ET

WASHINGTON—Securities and Exchange Commission Chairman Mary Jo White plans to step down in January, opening the door to a new Republican-appointed leader who could move to loosen rules on Wall Street and curb the aggressive enforcement approach Ms. White prosecuted.

The change in command portends a significant shift at the SEC, which has for six years focused on tightening rules required by the 2010 Dodd-Frank Act, a regulatory overhaul championed by Democrats. A Republican SEC chairman, appointed by President-elect Donald Trump, also could pull back on a host of rules that Ms. White conceived, including curbs on mutual funds’ use of derivatives, and stricter controls on algorithmic traders and off-exchange venues known as dark pools.

Ms. White’s departure also creates uncertainty in the short run because the SEC would have to operate with just two of the five commissioner seats filled after she leaves. Gridlock could ensue because one commissioner would have an effective veto on any regulatory decision or enforcement action.

“Everything under Dodd-Frank is now up in the air,” said Scott Kimpel, a partner at Hunton & Williams LLP who previously worked as a legal adviser to a Republican SEC commissioner.

During Ms. White’s tenure, which began in April 2013, the SEC overhauled the regulation of money-market mutual funds, credit-rating firms, stock exchanges, and electronic trading venues. She frequently navigated political infighting at the SEC to complete Dodd-Frank requirements, and such friction could continue under a Republican chairman.

The SEC is normally governed by five commissioners, including three from the president’s party and two from the other. President Barack Obama nominated two candidates to fill the existing vacancies more than a year ago, but the gridlocked Senate hasn’t confirmed them. Republican Commissioner Michael Piwowar is likely to lead the agency as acting chairman after Ms. White exits, although Mr. Trump could nominate someone else as Ms. White’s permanent successor.

The SEC also pursued record numbers of enforcement cases during Ms. White’s term, including claims against private-equity firms such as Blackstone Group LP and Apollo Global Management. Her handpicked priorities included the policing of financial-reporting fraud and punishing even the smallest violations on the theory that it would deter a culture of misconduct.

Mr. Trump hasn’t yet signaled his choices to fill SEC vacancies. But his aides have tapped Paul Atkins, a conservative former SEC commissioner, to handle issues related to the transition for the SEC and other financial regulatory agencies.

The change in leadership at the SEC is just one of many ways financial regulation is expected to change course sharply—through personnel and policy—during Mr. Trump’s presidency. His transition team on Nov. 10 issued a statement saying it was crafting a plan to “dismantle the Dodd-Frank Act.”

http://www.wsj.com/articles/sec-chairman-white-to-leave-sec-opening-door-to-conservative-shift-1479160829