Paul Atkins Takes the Wheel at the SEC

On April 21, Paul Atkins took office as Chair of the Securities and Exchange Commission.  Chair Atkins served previously as a member of the Commission from 2002 to 2008.  After leaving the Commission, he founded a consulting firm, Patomak Global Partners, and served as its CEO until President Trump nominated him to chair the SEC.

In remarks at the White House, Chair Atkins said:

“It IS a new day. It is time for the SEC to end its waywardness and return to its core mission that Congress set for it: investor protection; fair, orderly, and efficient markets; and capital formation. I will work to protect investors from fraud, to keep politics out of how our securities laws and regulations are applied, and to advance clear rules of the road that encourage investment in our economy to the benefit of all Americans. A top priority of my chairmanship will be to provide a firm regulatory foundation for digital assets through a rational, coherent, and principled approach. We will work to ensure that the U.S. is the best and most secure place in the world to invest and do business.”

For public companies and their audit committees, the new SEC leadership is likely to mean a return to a more traditional approach to regulation and enforcement. For example, under Chair Atkins, the Commission is unlikely to expand disclosure requirements into ESG-related areas, such as climate and human resources.  Future rulemaking will give greater priority to cost-benefit analysis and minimizing burdens imposed on companies, absent clear investor protection benefits. The SEC is also likely to administer the proxy rules in a way that affords more deference to management and less encouragement to shareholder activists.

The SEC’s enforcement program will focus on back-to-basics fraud actions (including financial reporting cases), especially where direct monetary harm to investors is clear.  Enforcement will likely avoid pressing novel theories, such as the application of control requirements in areas where the impact on investors is open to question or that second-guess management judgment. See, e.g.,  Shoot the Wounded! SEC Charges that Inadequate Cybersecurity is an Internal Accounting Control Violation, July 2024 Update, and ESG Meets Disclosure Controls in an SEC Enforcement Action, February-March 2023 Update.  Enforcement may also emphasize individual accountability and de-emphasize high-dollar corporate penalties.