SEC Chair Paul Atkins delivered testimony before a US House subcommittee yesterday, touting his agency’s slimmer headcount, describing its progress in developing best practices around digital assets and the roles each of the other three commissioners will play along with their regular full-time gig.

A new day at the SEC

Atkins proclaims it to be a new day at the SEC, with the agency returning to the core mission that Congress set for it more than 90 years ago. “Regulation should be smart, effective, and appropriately tailored within the confines of our statutory authority,” he said.

Atkins noted that the agency’s comment periods “will not be artificially short,” giving the public “ample time to provide feedback.”

He said the SEC will also be sure to take into consideration how rules overlap and how regulatory burdens build, in keeping with our obligation to consider their costs and benefits. The SEC will be working more closely with the Office of Information and Regulatory Affairs on rulemaking, he noted.

He thanked Commissioner Uyeda for creating the Crypto Task Force and having Commissioner Hester Peirce head it up, working with staff to provide necessary guidance to the industry.

During Uyeda’s temporary chairmanship, the SEC also normalized the its stance regarding materiality of disclosure requirements to comply with Supreme Court rulings and extended certain compliance dates and removed personally identifiable information from the Consolidated Audit Trail.

“The Commission will focus on providing meaningful pathways for entrepreneurs to obtain the capital that they need to execute their innovative ideas and grow their companies in both the private and public markets. At the same time, investors that provide such capital must be able to continue to depend on effective enforcement against fraudulent activities,” Atkins stated.

Digital assets

Atkins said he was pleased that Commissioners Uyeda and Peirce have worked together to establish the Crypto Task Force, with Peirce leading its effort to craft a regulatory framework for crypto asset markets. “For too long, the Commission has been hindered by policymaking silos. The Crypto Task Force exemplifies how our policy divisions can come together to expeditiously provide long-needed clarity and certainty to the American public,” he said.

The task force has held four roundtables so far on further defining security status, tailoring regulation for crypto trading, custody considerations, and tokenization, and the final one will be focus on decentralized finance and will be held on June 9.

New roles for commissioners

Atkins outlined new roles for his fellow commissioners that go beyond their day jobs, just like Peirce with her stewardship of the crypto taskforce.

He said he has asked Commissioner Uyeda to be the SEC’s “ambassador” to the International Organization of Securities Commissions (IOSCO).

And he noted that Commissioner Caroline Crenshaw will take on the SEC’s administrative law proceedings framework and the procedures in adjudications used by the SEC’s administrative law judges (ALJs) in light of Supreme Court rulings that require the agency to rethink and reform this area.

(Background on Crenshaw’s formidable task: The US Supreme Court ruled last year in the case SEC v. Jarkesy that a respondent would be deprived of a jury trial as guaranteed by the Seventh Amendment of the US Constitution if they were subject to an administrative hearing, as SEC hearings are not governed by the Federal Rules of Civil Procedure. And earlier this year President Trump issued Executive Order No. 14215, with the stated purpose of making federal agencies, including independent regulatory agencies, like the SEC, “truly accountable to the American people,” and “authoritative interpretations of law for the executive branch” can be made only by the president and the attorney general. With the Department of Justice and SEC announcing that they are no longer defending the constitutionality of ALJs by filing a “notice of change in position” in the case Lemelson v. SEC, it’s hard to see what their remit will be going forward.)

Headcount cuts

According to Atkins, the number of employees at the SEC’s offices and divisions had dropped by 15% since the start of the fiscal year. Atkins reported that at its peak headcount last year, the agency had about 5,000 employees and 2,000 contractors. That has dipped to 4,200 employees and 1,700 contractors now. (When he left the agency in 2008 during his first stint there, the SEC had about 3,600 employees, he mentioned.)

Atkins suggested that many employees opted to take early retirement and voluntary separation incentives, as well as the “Fork in the Road” buyout program initiated by the Trump administration, while others left to “pursue other opportunities”. In many cases, he admitted, these positions are now vacancies that need to be filled.

The SEC’s legal and investment management divisions have been the hardest hit, according to Reuters.

In February, the SEC announced that the Los Angeles and Philadelphia regional offices would see their leases end (closing down two of the SEC’s 10 regional offices), but Atkins said in his testimony that this is not a closed deal yet, as discussions with the US General Services Administration were ongoing.

Atkins said he was seeking approval from Congress to disband what is known as agency’s Strategic Hub for Innovation and Financial Technology, explaining that “innovation should be ingrained into the culture SEC-wide and not limited to a relatively small office.”