Partisan discontent appeared to break out in the hallowed halls of the Securities and Exchange Commission today, with the agency’s two Republican commissioners releasing a statement questioning the wisdom of SEC Chairman Gary Gensler’s regulatory agenda, which proposes amending a string of recent rules.

Gensler released the agency’s official “Spring 2021 Unified Agenda and Regulatory and Deregulatory Action” and the SEC chair’s agenda on Friday.

The action isn’t sitting well with SEC Commissioners Hester Peirce and Elad Roisman, who said that the agenda makes clear that Gensler’s recent directive to SEC staff to “consider revisiting” recent proxy voting advice “was not an isolated event, but just the opening salvo in an effort to reverse course on a series of recently completed rulemakings,” the commissioners said in a joint statement.

While “there are important and timely items on the list, including rules related to transfer agents and government securities alternative trading systems, the agenda is missing some other important rulemakings, including rules to provide clarity for digital assets, allow companies to compensate gig workers with equity, and revisit proxy plumbing,” the commissioners noted.

“Perhaps the absence of these rules is attributable to the regrettable decision to spend our scarce resources to undo a number of rules the commission just adopted,” Peirce and Roisman said.

The process of adopting rules can take years and often requires companies to make significant investments in compliance, technology, training and even staffing. 

Despite that, Gensler’s new agenda includes proposals to further amend rules on conflicts and conflicted compensation and revisit the accredited investor definition, whistleblower rules, proxy updates, resource extraction payments and the harmonization rules.

“Not only are the commission’s most recent amendments to each of these rules less than a year old, they have only been effective for a range of three to seven months,” the commissioners wrote.

“As far as we can tell, the agency has received no new information which would warrant opening up any of these rules for further changes at this time. We are disappointed that the commission would dedicate our scarce resources to rehashing newly completed rules,” they added.

The fact that Gensler is asking SEC staff to revisit new rules and amendments may well mean that any regulation could be fair game for amendments, including Regulation Best Interest, one securities attorney who requested anonymity told Financial Advisor. 

“To meet our mission of protecting investors, maintaining fair, orderly, and efficient markets, and facilitating capital formation, the SEC has a lot of regulatory work ahead of us,” Gensler said in an accompanying statement on Friday. “I look forward to collaborating with my fellow commissioners and the dedicated staff to propose and finalize rules that will strengthen our markets, increase transparency and safeguard investors.” 

While the two Republican commissioners can vote no on new amendments and rules, the five member commission has a Democrat majority.

Areas Gensler cited as priorities for amendments or rulemaking include the following:
 
• Disclosure relating to climate risk, human capital, including workforce diversity and corporate board diversity, and cybersecurity risk.

• Transparency around stock buybacks, short-sale disclosure, securities-based swaps ownership and the stock loan market.

• Investment fund rules, including money market funds, private funds and ESG funds.

• Unfinished work directed by the Dodd-Frank Act of 2010, including securities-based swaps and related rules, incentive-based compensation arrangements and conflicts of interest in securitizations.

• Enhanced shareholder democracy.

• Special purpose acquisition companies (SPACs).

The SEC “historically has embraced a transparent, methodical and rigorous rulemaking process to ensure its rules reflect sound policy, transcend political differences, and thus enable our registrants to operate in a consistent, predictable regulatory regime,” the GOP commissioners said.

But with many of the specific rulemakings Gensler identified in his agenda, “the commission and its staff undertook an even more rigorous and extended process” to solicit industry and public input,” Peirce and Roisman said.

For most of the specific rulemakings that the agenda would reopen, the SEC and  staff “undertook an even more extended and rigorous process to obtain public input,” they added.

Both commissioners said they hope “Gensler will reconsider the need to revisit freshly minted rules,” but look forward to working with him and fellow commissioners on both the agenda and “on addressing issues of perennial importance such as elder investor fraud and small business capital formation.”