Required Reading for New Commissioners (Part 3)

We are discussing Commissioner Aguilar's recent public statement, Commissioner Aguilar's (Hopefully) Helpful Tips for New SEC Commissioners.  

The talk also highlighted an inevitable reality of life as a commissioner.  Despite having final say on all matters resolved by the Commission, commissioners confront the reality that an extraordinary amount of responsibility is either delegated to the staff or exercised by the staff in the form of informal advice.  As his statement notes, this is necessary given the complexity and breadth of Commission activities.   

  • From time to time, you might read in a newspaper about a “Commission action,” and you will have no idea what it is about. So you’ll ask yourself, am I having a “senior moment?” Am I suffering from amnesia? Probably not. In all likelihood, the staff had taken action pursuant to the more than 376 separate rules where the Commission previously granted delegated authority to the SEC staff.  These delegations have become necessary and have grown over time because individual Commissioners could not realistically handle the tremendous volume of matters that require Commission action. 

Awareness of the authority is important, so is notification by the staff.  As Commissioner Aguilar stated:  

  • This is not to say, however, that the Commissioners should not be notified when the staff takes action on particularly important matters via delegated authority. During my tenure, the staff has improved at giving Commissioners a “heads-up” about notable actions that the staff plans to take using its delegated authority. Nevertheless, there are still times when the staff acted based on delegated authority on important matters (or, at least, important to one or more Commissioners) without notice to the Commissioners. Accordingly, you should familiarize yourself with these delegations.

Where authority has been delegated, a single commissioner can ask to have the matter considered by the entire Commission.  17 CFR 201.431 ("The vote of one member of the Commission, conveyed to the Secretary, shall be sufficient to bring a matter before the Commission for review.").

Matters are also handled informally by the staff but not pursuant to delegated authority.  As Commissioner Aguilar noted:   

  • Speaking of the staff’s powers, be aware of a number of other areas where the staff has authority to act without prior Commission approval. This authority includes, among many other things, the power to issue “no-action,” interpretive, or exemptive relief letters, and to publish staff guidance, such as Staff Legal Bulletins or Staff Accounting Bulletins. 

Individual commissioners have less authority with respect to these positions.  As he noted:  "Unlike staff actions taken via delegated authority, however, individual Commissioners have no power to require that these matters be brought before the entire Commission."

Commissioner Aguilar has served during a formative time at the SEC.  The SEC's oversight responsibilities have become broader and more complex.  The role of individual commissioners has evolved.  His "Helpful Tips" will not replace trial and error as a teaching tool but will provide new commissioners with a much quicker start in becoming active and effective participants in the mission of the SEC.    

J Robert Brown Jr.