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Warren Berates SEC's White about Dodd-Frank and Enforcement
Thursday, June 4, 2015 6:45 AM

Sen. Elizabeth Warren (D-MA) sharply criticized Securities and Exchange Commission Chair Mary Jo White in a June 2 letter, asking for details about the agency's enforcement actions and implementation of key Dodd-Frank Act rules.

Warren has repeatedly urged SEC officials to go harder after banks and other firms that run afoul of securities laws, but the lawmaker's letter represents what is her most pointed and public reproach of White's two-year tenure at the agency.

"To date, your leadership has been extremely disappointing," Warren wrote, indicating the "significant gap between the promises you made during and shortly after your confirmation and your performance as SEC chair."

Warren noted that the SEC has so far failed to implement a Dodd-Frank provision that would require companies to disclose the pay of a chief executive relative to median workers at a given firm, raising questions about the length of the delay. She added that White told her last month the rule would be completed this fall, though regulatory guidance suggests it's now due out next spring.

Warren wrote, "I cannot understand how or why this rule has been delayed for so long, and I am perplexed as to why you told me personally that the rule would be completed by the fall of 2015 when it appears that you were or should have been aware of additional delays."

The Massachusetts lawmaker also raised concerns with the SEC's efforts to punish firms involved in illegal activity, and she pressed for information about why the agency isn't requiring admissions of guilt in more cases and why it continues to grant some large banks certain waivers to conduct business even after being involved in multiple settlements.

White signaled in 2013 that the SEC would seek admissions of guilt from companies in certain cases, though Warren has argued the effort doesn't go nearly far enough. Warren reported in the letter that out of 520 cases, the agency has required admissions of guilt in just 19 instances.

"In fact, the record of the SEC under your leadership is even worse than those numbers suggest," she added. "In 11 of these 19 cases, SEC required only a broad admission of facts specified by the SEC rather than requiring that these firms admit to violations of specific securities laws."

Warren also questioned White about recusing herself in dozens of cases since joining the SEC, both due to her former work at a powerful law firm that defends big banks and other major corporations before the agency, as well as her husband's ongoing work at another large law firm.

Such recusals lead to deadlocked votes at the five-person agency, Warren argued, which can be "quite damaging." "If, for example, the SEC is split 2-2 on whether to pursue a prosecution, your recusal would mean that no prosecution could go forward," Warren wrote.