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Atkins’ SEC Pick Raises Questions on Future Enforcement

By  |  January 7, 2025

President-elect Donald Trump’s pick for the Securities and Exchange Commission (SEC), Paul Atkins, has a history of opposing aggressive enforcement actions during his tenure as a commissioner, a stance that could shape the direction of the agency under his leadership, according to Reuters. Atkins, who served from 2002 to 2008, consistently voted against punitive measures aimed at major corporations, including high-profile firms like Citigroup and IBM.

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    A review of SEC records from that period reveals that Atkins voted against at least 10 enforcement actions. These included cases involving individuals and companies accused of violations. The commissioner often clashed with fellow Republicans on the SEC’s leadership, challenging their efforts to hold corporations accountable. Three former SEC enforcement staff members told Reuters that Atkins was known for meticulously scrutinizing enforcement proposals, frequently pushing back on recommendations to bring charges.

    Atkins’ criticism of the SEC’s approach to enforcement was no secret. He argued that corporate fines often harmed shareholders rather than the wrongdoers themselves, and advocated for focusing on individual fraudsters instead of corporate misconduct. His views were particularly notable during the aftermath of the Enron and WorldCom accounting scandals, which led to heightened scrutiny of corporate behavior.

    The details of Atkins’ dissenting votes, which had not been widely reported before, offer a glimpse into his approach to regulation. As President-elect Trump’s SEC pick, his history suggests that Wall Street may face less stringent oversight compared to the aggressive enforcement measures under current SEC Chairman Gary Gensler, whose agency imposed over $20 billion in penalties and charges.

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    The shift in enforcement priorities under Atkins could have implications for high-profile companies under investigation by the SEC. Among those potentially affected are electric vehicle maker Tesla, cryptocurrency exchanges Coinbase and Binance, and major investment firms such as BlackRock, Carlyle, and TPG. Sources familiar with Atkins’ views suggest that under his leadership, the SEC would likely target misconduct that directly impacts investors, such as fraud schemes, rather than focusing on broader corporate malfeasance where harm is less immediately apparent.

    Critics, however, warn that such a shift in focus could pose risks, especially given that large corporations can have systemic effects on the broader market. Tyler Gellasch, a former SEC official who now leads the Healthy Markets Association, argued that this approach could allow companies with significant influence to avoid meaningful accountability.

    “If Atkins’ nomination is confirmed, it should alleviate some of the tension in compliance departments,” Gellasch told Reuters, referencing how his less aggressive stance on enforcement may ease pressure on companies.

    Atkins has not publicly commented on his SEC nomination or his stance on enforcement since being nominated. In recent years, he has advocated for a more hands-off regulatory approach and has represented businesses in regulatory disputes through his consultancy, Patomak Global Partners.

    Source: Reuters