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Washington

SEC nominees commit to revisiting regulations, holding executives accountable

The Securities and Exchange Commission could have a full commission shortly, following a Senate confirmation hearing Tuesday to consider Republican appointee Hester Peirce and Democratic appointee Robert J. Jackson Jr.

Senate Banking Committee Chairman Mike Crapo, R-Idaho, said the candidates appear to have full Senate support for when a floor vote is held in the coming weeks. The commission currently has three members and has not had all five positions filled since 2015.

Ms. Peirce said one of her goals as a commissioner would be making regulations less burdensome. "If regulation is appropriately flexible, innovation can bring new investors into the financial markets, lower prices, and improve the quality of financial products and services. Innovation forces existing companies to stay on their toes and pushes them aside when they fail to meet people's needs," she told the panel.

She is a senior research fellow at the Mercatus Center at George Mason University in Fairfax, Va., where she is director of the financial markets working group. She is a former staff member of the Senate Banking Committee and SEC staff attorney who served as counsel to former commissioner Paul Atkins.

Mr. Jackson is a Columbia Law School professor who directs the program on corporate law and policy, with a focus on executive compensation and corporate governance. He served as a senior policy adviser with the Treasury Department's Office of the Special Master for TARP Executive Compensation and in private practice.

Mr. Jackson said his work has focused on everyday investors' confidence in markets. During the financial crisis while serving at the Treasury Department, Mr. Jackson helped develop rules tying top managers' pay more closely to performance and giving investors a voice on executive compensation. At Columbia, his research team showed how high-speed traders got market-moving information through SEC systems before the public did, and worked with the SEC to correct that.

Mr. Jackson argued for more funding for SEC efforts to address cybersecurity. "I'm not sure we can ask the SEC to keep up unless we provide them the resources," he said.

Questioned by several committees on the fiduciary rule, Ms. Peirce said, "I am glad that calmer minds have prevailed" at the Department of Labor, which is reviewing the new rule for possible revisions or delays. Mr. Jackson said that while a fiduciary standard "is a natural role for the SEC … what is important in developing this standard is making sure that the market and investors have consistency."

Ranking committee member Sen. Sherrod Brown, D-Ohio, pressed the nominees to hold individuals accountable for the financial crisis. "The failure to hold any senior executives responsible for the massive misconduct during the financial crisis stands out as a failure in enforcement and not just at the SEC," Mr. Brown said at the hearing.

Both nominees supported further action on executive accountability. "I am worried that too often we are just seeing settlements using shareholder money to take the focus off the executives," Ms. Peirce said when questioned by Sen. Catherine Cortez Masto, D-Nev. "I will commit to looking at individuals," she said. Mr. Jackson offered to focus on settlements with companies and individuals, and to update the law to enable the SEC to bring successful cases against individuals.