WSJ CFO's Tatyana Shumsky writes:
The Securities and Exchange Commission said it is marching ahead with inspections, company filing reviews and enforcement of financial regulations, even though the new administration is painting a future free from such rules.
Dodd-Frank Wall Street reform rules remain on the books despite President Donald Trump’s executive orders aimed at rolling back the law and overhauling federal regulations.
SEC staff spent two days at the Practicing Law Institute’s “SEC Speaks” Conference in Washington D.C. recapping a year of progress on financial reforms likely to be stripped away by a new president and Republican-led Congress. And they also stressed continued enforcement of those rules.
The discord between anticipated regulatory change and the SEC’s continued enforcement and oversight work underscores the treacherous path forward facing corporations affected by these rules.
Finance chiefs must decide whether to expend time and resources to comply with requirements that could soon be vacated, such as disclosing the gap between executive and median worker pay. Even though many companies have complained that collecting the necessary information for that and other rules is expensive, they still have to do the work because they risk of running afoul of regulators.
“If I’m a CFO of a public company, I have to assume that that [pay ratio] rule is in place and do the work,” said Daniel Gallagher, a former Republican SEC commissioner. “And that’s a shame because I have hope and anticipation that that rule as written today will be moot.”
Potential deregulatory momentum from the executive branch belies the slow Congressional legislative process often necessary to vacate financial regulations. Many of the rules enforced by the SEC were mandated by the Dodd-Frank and Sarbanes-Oxley laws, which can only be revoked by Congress.
SEC staff await the confirmation of Trump chairman nominee Jay Clayton, who will have to go through the SEC’s cumbersome rule amendment process to adjust existing rules.
“I bet it will take about three years to plough through what has been done in the past eight,” said Paul Atkins, a former Republican SEC commissioner and the Trump transition team’s point person on financial regulation. “You’re going to have to triage.”
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