Today, the SEC issued this release announcing that Chairman Mary Schapiro will be leaving the SEC in December. After 4 years, she is one of the longest serving Chairmen and in the past two years brought a record number of enforcement actions.
Until President Obama has his nomination for replacement confirmed by the Senate, SEC Commissioner Elisse Walter will step in. She has been at the SEC for more than 4 years and acted as Chairman before Mary’s confirmation.
So the question is where does this leave the pending rule-making efforts; particularly the pending general solicitation proposed rules?
The JOBS Act was passed in April 2012. The SEC was directed to to Amend Rule 506 of Regulation D to permit general solicitation within 90 days. The SEC then allowed the 90 day statutory deadline to pass on July 4, 2012 without action. Then after a delayed open meeting on August 29, 2012 the SEC released the proposed rule. After the thirty days the SEC could issue a final or interim final rule. That has not been done.
The SEC issued a proposed rule instead of a final rule because there seemed to be significant disagreement, particularly as to the extent of an array of investor protections. Two Commissioners wanted a narrow application of Section 201 of the Jobs Act, while the other two wanted to implement a number of strict investor protection provisions. Mary Schapiro seemed hold the deciding vote and her statements make it clear that she was not comfortable releasing an interim final rule with immediate effectiveness.
Will the departure of Mary Schapiro speed up this much anticipated rule-making? Perhaps her replacement will ease the Commissioner’s tensions or will it only lengthen the process while the new Chairman is acclimated? In the upcoming months there will be many discussions about prospective Chairman nominees, and we will be paying special attention to their opinions on the JOBS Act.
Author: Jennifer Trowbridge, Stoecklein Law Group, LLP