(Adds further context and background, notes that SEC declines
to comment on timing)
By Sarah N. Lynch
WASHINGTON Dec 12 U.S. Securities and Exchange
Commission Chair Mary Jo White on Monday defied requests by
Senate Republicans to delay adopting new rules on everything
from derivatives to mutual funds until after President-elect
Donald Trump takes office.
In a letter to the Senate Banking Committee's top two
Republicans, Chairman Richard Shelby and Mike Crapo of Idaho,
White stressed it was "incumbent" on the SEC to "exhibit a
spirit of firm independence" in performing its regulatory duties
"without fear or favor."
White's Dec. 12 letter, which was reviewed by Reuters, comes
in response to a request last month by Shelby and Crapo for the
SEC to cease adopting rules until after Trump had a chance to
review the agency's agenda.
Republicans in Congress have been pressing agencies across
the federal government to wind down their rulemaking activities.
Trump has vowed to kill many regulations put on the books
during the Obama administration, including the Dodd-Frank Wall
Street reform law.
White, an independent, is slated to step down from her post
at the end of Democratic President Barack Obama's term in
The Senate failed to confirm Obama's two nominees for vacant
commissioner slots at the SEC before it recessed last week,
which means that after White departs next month, the SEC will
only be left with two commissioners - one Democrat and one
Even before she leaves, she could still fail to get the
rules passed if she cannot get a quorum of commissioners to
Trump has yet to announce a nominee for SEC chair, but many
of the people working on his financial regulatory transition
team, such as former SEC Commissioner Paul Atkins, have been
highly critical of many of the SEC's rules and Dodd-Frank more
In White's letter on Monday, she provided Shelby and Crapo
with a list of all the rules currently ready for a vote.
Among the rules on the list are derivatives reforms mandated
by Dodd-Frank, such as capital and margin requirements for swap
dealers, as well as a more controversial one that would limit
how mutual funds and exchange-traded funds use derivatives to
The letter did not say when the SEC might vote on the rules.
The agency could do it during an open meeting or behind closed
doors. An SEC spokeswoman declined to comment on the timing.
"I am not insensitive to the issues raised by your letter
and have carefully considered what impact, if any, the election
should have on the current work of the Commission," White wrote.
She added that she had confirmed that the SEC "historically
has proceeded with its work during comparable post-election
In support of her position, White included footnotes in her
letter citing prior statements by Republican SEC Commissioner
Mike Piwowar, who is poised to become acting chair in January,
in which he voiced support for completing new derivatives rules.
This is not the first time the SEC has faced criticism on
efforts to complete rules before a change in leadership at the
In 2005, a federal appeals court sided with the U.S. Chamber
of Commerce in a dispute with the SEC over controversial rules
requiring the majority of mutual fund board directors to be
The court sent the rule back to the SEC with a directive to
consider its costs.
Then-SEC Chairman William Donaldson promptly scheduled a
meeting and the SEC re-adopted it a day before his resignation,
saying the rule would not be overly costly.
The rule was subsequently overturned a second time, and the
court chided the SEC for failing to follow proper rulemaking
Even if White is successful in adopting final rules in the
coming weeks, Congress may have a way to undo them when Trump
takes office on Jan. 20.
By law, Congress can vote to reverse regulations within 60
legislative days of them becoming final - which could be easier
to accomplish under a Republican-controlled Congress and White
(Reporting by Sarah N. Lynch; editing by Phil Berlowitz and