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March 15 — Securities and Exchange Commission nominees Lisa Fairfax and Hester Peirce faced tough questions March 15 from members of the Senate Banking Committee regarding their past academic work, commentary and stances on issues confronting the agency.
Many of the questions had a political tone, somewhat in line with the partisan divide that has rankled the agency in recent years.
The nominees mostly stayed above the political fray, hesitating to speculate on how they would vote on key rules. They pledged that their academic work and advocacy wouldn't slant their decisions as commissioners.
Fairfax, a law professor at George Washington University, is up for a Democratic seat, and Peirce, a scholar at the right-leaning think tank Mercatus Center, is set to occupy a Republican one.
The committee will likely vote on the nominations April 7, Chairman Richard Shelby (R-Ala.) said.
As an example of the political atmosphere surrounding the agency's decisions, the nominees took heat from Democratic senators over a political disclosure spending rule.
Sens. Chuck Schumer (D-N.Y.) and Robert Menendez (D-N.J.) pushed the nominees about whether they would support a potential rule that would require public companies to disclose their political spending.
The nominees essentially took no stance on the issue, citing a lack of specifics about any particular rule and a government spending measure that prohibits the SEC from adopting the rule.
Democrats say that even though the law prevents the SEC from making the rule, it doesn't stop the agency from preparing it.
Their answers caused Schumer to say he is “leaning against both your nominations.”
Peirce also faced withering criticism from Sen. Elizabeth Warren (D-Mass.), who called attention to Peirce's past opinion pieces that were often reproachful of financial regulations.
Peirce has criticized the Dodd-Frank Act for the rules it assigned to the SEC, questioned SEC priorities and accused the agency of trying to regulate by enforcement .
Warren said she was concerned that Peirce would “sabotage” financial regulations if confirmed, an implication that Peirce attempted to parry by saying that she would adhere to the law and abide by the agency's rules.
“I would work on implementing the rules as best they could be implemented and pointing out where I thought there might be issues that Congress should look at again,” Peirce said. “The responsibility of the agency is to enforce the rules”
“Your record gives the American people reason to be concerned about your nomination,” Warren responded.
Sen. Mike Rounds (R-S.D.) also quizzed Fairfax on two U.S. Supreme Court friend-of-the-court briefs she signed on to, including one arguing that shareholders should have more input in the company's decisions whether to sell guns.
Fairfax said her participation in the amicus brief had nothing to do with her views on the underlying political issues, and instead were “aimed at the larger corporate governance proposition.”
Shareholder advocacy should “maintain that careful balance between allowing directors and offers the ability and the important discretion to set corporate policy, on the one hand,” she said, “and to allow shareholders to communicate on issues they think are significant, on the other.”
Much of Fairfax's academic work is in corporate governance, and she wrote a book on shareholder activism.
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