Aguilar to SEC: Revise Waiver-Review Process

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By Phyllis Diamond

Aug. 27 — The Securities and Exchange Commission should revise its process for handling requests for waivers from statutory disqualifications to provide more transparency not only to the public but to the agency itself, Commissioner Luis Aguilar said Aug. 27.

There are two “basic reforms” that could be easily implemented, he said in a public statement:

• First, the staff—which handles the “vast majority” of waiver requests pursuant to delegated authority—could be directed to provide the commission with periodic reports detailing relevant information about the waiver process, including the inquiries received, the surrounding circumstances and final disposition.

• Second, the commission could create a public website to track the process and ultimate resolution of all waiver requests and inquiries. “This information would provide useful guidance, and would introduce additional transparency to a process that has garnered considerable public interest in recent years.”

 

Ultimate Goal

As a consequence of an SEC enforcement action, a person or entity may be automatically disqualified from conducting certain activities or relying on certain registration exemptions. However, SEC rules allow parties subject to disqualification to seek a waiver from the agency.

The granting of waivers has generated conflict—both Aguilar and fellow Commissioner Kara Stein have dissented from doing so.

In his statement, Aguilar urged the commission to consider revising its waiver review process so that both the agency and the public have more insight into the process, especially for waivers handled by delegated authority. The “ultimate goal is clarity and transparency.”

He noted that the public generally has access only to SEC orders that grant waiver requests. “But, as a significant proportion of waiver requests appear to be unsuccessful, there may be a substantial gap in the public’s ability to understand the rationale that drives the staff’s waiver decisions.”

Moreover, Aguilar said, parties that may become subject to a regulatory disqualification “deserve a complete explanation of the circumstances that may lead to a waiver request not being granted.”

Aguilar said the views he expressed are his own and not necessarily those of the commission or staff members.

To contact the reporter on this story: Phyllis Diamond in Washington at pdiamond@bna.com

To contact the editor responsible for this story: Phyllis Diamond at pdiamond@bna.com

To see Aguilar's statement, Enhancing the Commission's Waiver Process, go to http://www.sec.gov/news/statement/aguilar-enhancing-commissions-waiver-process.html.