SEC sees flurry of staff changes

The SEC has announced a series of changes among the ranks of its senior officials, including a new chief accountant and the departure of the top official overseeing broker-dealers and transfer agents.

SEC chair Mary Jo White earlier this month confirmed that, after almost four years at the helm, she plans to step down at the end of President Obama’s administration. Such departures are typical when there is a change in the presidency. ‘I am very proud of our three consecutive years of record enforcement actions, dozens of fundamental reforms through our rulemakings that have strengthened investor protections and market stability, and that the job satisfaction of our phenomenal staff has climbed in each of the last three years,’ White said.

Her move and other, more recently announced staff changes underline industry professionals’ expectation that corporate governance, compliance and risk officials at SEC-registered companies will face an altered SEC in 2017. President-elect Donald Trump will be able to nominate a new agency chair and two other commission members. Based on Trump’s statements during and since the election campaign, the new commission is widely expected to be less inclined to impose new, tough requirements.

A number of senior staffers have also said recently that they are departing. Stephen Luparello, director of the division of trading and markets, will leave the agency by the start of 2017, at which point Heather Seidel, chief counsel for the division, will become the acting director.

During Luparello’s tenure, the commission adopted Regulation SCI, which requires key securities market entities to have comprehensive policies and procedures for their technological systems, conduct business continuity testing, review their automated systems annually and take appropriate corrective action when system issues occur. He has also been involved in the agency’s efforts to enhance operational transparency and regulatory oversight of alternate trading systems, including dark pools, and oversaw proposed rules that would require broker-dealers to disclose to customers the handling of institutional orders.

‘We set an ambitious agenda to enhance our market structure. Steve was at the forefront of that effort, and his leadership and expertise have helped produce both important new protections for investors today and a strong foundation from which the commission can continue to further strengthen our markets for years to come,’ White says in a statement.

Matthew Solomon, chief litigation counsel for the enforcement division, will also leave the agency, in early December. Following his departure, David Gottesman, the division’s deputy chief litigation counsel, and Bridget Fitzpatrick, a supervisory trial counsel in the division, will serve as acting co-chief litigation counsel.

Solomon has led the division’s litigation program since September 2013, managing cases pending in both federal courts and in-house administrative proceedings. ‘Matt has won the respect of every trial and investigative attorney in the enforcement division with his keen intellect, strong strategic sense and outstanding trial skills,’ says Andrew Ceresney, director of the division.

In addition, chief accountant James Schnurr has said he plans to retire from the agency. Among other things, Schnurr has conducted oversight of FASB and worked with the PCAOB and representatives of the preparer and audit profession in addressing concerns on the interpretation and application of the requirements related to the guide to internal control over financial reporting.

Before joining the SEC, Schnurr had retired from Deloitte, where he was vice chairman and senior professional practice director and specialized in financial and SEC reporting for public companies. In April 2016, he was in a serious bicycle accident and is continuing his rehabilitation, officials note in a related filing.

Wesley Bricker, who has served as deputy chief accountant for the accounting group since 2015 and interim chief accountant since July 2016, will succeed Schnurr. The SEC’s chief accountant is the principal adviser to the commission on accounting and auditing matters. Bricker joined the SEC in 2015 from PwC, where he was a partner responsible for audit engagements in the banking, capital markets, financial technology and investment management industries.


Track record
During White’s tenure, the SEC has undertaken initiatives including:

• Instituting a new approach to enforcement by, among other things, using admissions of wrongdoing and enhanced data analytics and technology
• Completing much of the agency’s rulemaking obligations under the Dodd-Frank Act and all of its mandates under the Jobs Act
• Completing reforms of the money market mutual fund industry
• Proposed disclosure requirements under Regulation SK, including measures relating to management, certain security holders and corporate governance matters
• Implementing updated rules of practice for conducting administrative proceedings, including providing expanded rights of discovery
• Increasing the office of compliance inspections and examinations’ use of advanced quantitative techniques to enable examiners to detect misconduct through data analysis.