The Securities and Exchange Commission will allow asset managers and other firms to get disqualification waivers while they are negotiating enforcement settlements with the agency, SEC Chairman Jay Clayton said.
"I have been considering the factors that affect settlement negotiations and settlement agreements with an eye toward enhancing outcomes for investors and most effectively utilizing our resources," Mr. Clayton said in a public statement released July 3.
Mr. Clayton said in recent years the commission has considered settlement offers and waiver requests "almost exclusively on a segregated basis," which can complicate negotiations, strain agency resources, and might not do much to protect investors, while for the firms involved it could have collateral consequences ranging from "immaterial to extremely significant," he said. The process for deciding whether to grant those waivers "will continue to be rigorous and fair," and the SEC is under no obligation to accept any settlement and waiver offer, he added.
The new policy could streamline SEC negotiations with firms involved in enforcement actions that are hesitant to proceed without a waiver. It could also lead to waiver requests being rubber-stamped, said Dennis Kelleher, president and CEO of watchdog group Better Markets. "One could think that they're redoing the process under the claim of efficiency, when in fact they appear to be doing it to get less public scrutiny" of a process that was mandated by Congress, Mr. Kelleher said.
