Confirmation of two candidates to serve on the Securities and Exchange Commission is being held up by Sen. Tammy Baldwin, D-Wis., over concerns about activist hedge funds, stock buybacks and executive compensation rules.
Ms. Baldwin, the sponsor of legislation that would require more disclosure from activist investors, said she will not agree to an expedited vote on the confirmations of Robert Jackson Jr. and Hester Peirce until they respond in writing to letters sent to them Nov. 29 seeking their views on these issues.
Ms. Baldwin is refusing to agree to a unanimous consent request for a Senate vote, which would expedite the process under Senate rules.
In the identical letters, Ms. Baldwin said that the SEC has presided over the "'financialization' of our economy, which has facilitated the looting of the American corporation by short-term shareholders."
Ms. Baldwin wants the SEC to study buybacks and impose stricter rules on executive compensation. While it has broad congressional authority to rein in abuses, "the SEC has been hesitant to do so," she said in the letter.
On activist hedge funds, Ms. Baldwin said that the SEC has the authority to make many of the changes her bill addresses, and asked the nominees if they would support updating rules if investors are found to be intentionally skirting disclosure rules.
On stock buybacks, Ms. Baldwin said they reward short-term investors and executives "at the expense of workers and investors saving for retirement," and asked if the nominees support more disclosure and more granular data about such transactions.
She also asked them if they support finalizing Dodd-Frank rules on executive pay, which were not on the commission's list of pending regulations.
Ms. Peirce is a senior research fellow at the Mercatus Center at George Mason University, where she is director of the financial markets working group. She previously worked at the SEC as a staff attorney and 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.
Ms. Peirce and Mr. Jackson were confirmed Nov. 1 by the Senate Banking Committee in a voice vote, and referred to the full Senate for a final vote. During their confirmation hearings, both Ms. Peirce, a Republican appointee, and Mr. Jackson, a Democratic appointee, committed to revisit regulatory burdens and hold executives accountable.
If approved by the full Senate, the SEC would have its first full five-member commission since 2015.
