Chuck Schumer has refused to nominate someone to fill the second seat.
Last summer, Senate Minority Leader Chuck Schumer failed to name a candidate for a minority position on the Securities and Exchange Commission, and now Wall Street lawyers are celebrating a virtual amnesty that they think could last the rest of Donald Trump’s term.
In a remarkably candid editorial, five partners with the D.C. law firm Debevoise & Plimpton have confidently predicted that the SEC will refrain from imposing financial penalties on corporations for securities violations “for the remainder of the current presidential term.” This benefits the large trading and securities interests that employ Debevoise for legal defense work. The editorial amounts to Debevoise informing their clients that the coast is clear.
The reason for the expected decrease in enforcement has to do with a fatal delay by Schumer to name a minority commissioner and the Trump administration’s unprecedented exploitation of this mistake.
The SEC is currently operating with four commissioners, three of whom were appointed by Republicans. Like many independent commissions, two of the SEC’s five commissioners must not be members of the party in the White House. But Kara Stein, a Democratic commissioner, ended her tenure January 2, and that seat remains vacant. Allison Lee, the former Stein aide preferred by Senate Democrats as her replacement, has yet to be formally nominated, though her name was recommended several months ago. Bloomberg reported March 20 that Lee will be announced “in the coming weeks,” though they also reported that last August.
The Debevoise partners, whose clients include numerous big bank and securities firms, explain that this imbalance will come as good news for companies looking to break securities laws. “Because it is likely that this four-person commission will remain in place for the remainder of the current presidential term, we may soon see fewer corporate penalties in financial reporting cases and, if recent votes are indicative, potentially more broadly,” they write in an analysis for Law360, a trade publication for the legal community.
“It’s absolutely astonishing,” said David Segal of Demand Progress, which has closely tracked personnel moves under the Trump administration. “Trump’s violation of the longstanding norm that minority-party commissioners will secure nominations and fair confirmation processes is so severe that white-collar defense firms are now advising clients that laws likely won’t be enforced against them for the rest of his term.”
It would be highly unusual for a president to hold vacant a commission seat intended for the opposing party for two years. But critics like Segal place some of the blame on Schumer for failing to submit Lee’s name for consideration when there was an open Republican seat on the SEC last summer. Typically, commission slots like this move in pairs, giving Democrats and Republicans a reason to vote for the nominee from the other party.
Chuck Schumer is bought and paid for by Wall Street, and he doesn’t make unforced errors like this.
He did this because he’s opposed to meaningful enforcement actions against the Banksters.