Mr. Piwowar’s resignation was expected with his term ending officially in June, though he had the option to remain in office longer. Since joining the Commission in 2013, Mr. Piwowar has been a staunch critic of the 2010 Dodd-Frank Act. He served as the interim Chair of the SEC for a period in 2017, during which he opened a public comment period exploring reconsideration of the pay ratio rule.
Piwowar’s departure may suspend SEC Chair Jay Clayton’s ability to pursue his regulatory agenda. The SEC is governed by a Commission of five with three members coming from the President’s party. Given Piwowar’s resignation, the two Democratic commissioners can block rulemaking due to the SEC’s three commissioner quorum requirement for rulemaking votes.SEC Commissioner Kara Stein will stay on as commissioner despite her term having officially ended last June. SEC rules allow commissioners to stay on beyond the expiration of their term until the end of the year after or the nomination of their successor, whichever comes first. To further delay Clayton’s ability to engage in key rulemakings, Stein is unlikely to depart until her successor is chosen.
Another confirmation battle looms with Piwowar’s resignation and Stein’s imminent departure. With the SEC once again unable to vote on contested rules, President Trump will need to nominate two replacements – one Republican and one Democrat. This could happen as early as this fall with a year-end confirmation goal.
In the meantime, the SEC will be unable to engage in any contested rulemaking until replacement commissioners are confirmed. The scenario returns the agency to where it was less than six months ago with only three commissioners. Any regulatory changes in the meantime will have to be made on the margins by SEC staff.
