Developments in Securities Regulation, Corporate Governance, Capital Markets, M&A and Other Topics of Interest. MORE

In an investigation conducted at the request of four Senators, the SEC Inspector General concluded “we do not find that Commissioner Piwowar’s actions as Acting Chairman violated any of the laws currently governing the SEC and our review identified no evidence that his actions could either undermine the SEC’s mission or potentially prove to be a waste of SEC staff time and resources.”

The actions investigated by the Inspector General were:

  • Statements issued by Chairman Piwowar with respect to the conflict minerals rules, instructing SEC staff to develop recommendations for the rules and related no-action guidance issued by the SEC staff.
  • Soliciting comments on the pay ratio rule and directing SEC staff to reconsider the implementation of the rule.
  • Removing the ability of certain senior officers of the SEC Division of Enforcement to issue formal orders of investigation.

Some of the reasons the Inspector General gave to support the conclusions were:

  • President Trump chose Commissioner Piwowar as Acting Chairman until a permanent Chairman could be confirmed.
  • Commissioner Piwowar’s decision to opine and seek public input on the final SEC pay ratio and conflict minerals rules did not constitute “agency action;” therefore, no quorum of Commissioners was required.
  • As acting Chairman, Commissioner Piwowar had the ability to direct SEC staff and SEC administrative units to carry out Commission business.
  • The Reorganization Act of 1949 and related documentation authorized then-Acting Chairman Piwowar to remove the sub-delegation of authority to issue formal orders of investigation because this decision involved “the distribution of business among [personnel employed under the Commission] and among administrative units of the Commission.”