Senate Dems press SEC chair to slow Wall Street rules

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Senate Democrats are privately urging SEC Chair Gary Gensler to slow work and take more time for feedback on a slew of regulations rattling Wall Street, as tensions surrounding the agency's Biden-era agenda reach a boiling point.

In a previously unreported letter, a dozen Democrats led by Sen. Jon Tester of Montana asked Gensler to give the public more time to weigh in on the raft of rules the agency is proposing. The SEC's agenda includes a landmark climate risk disclosure rule for public companies, new transparency requirements for hedge funds and a revamp of the stock market's plumbing.

The Democrats who signed the letter include: Raphael Warnock of Georgia, Kyrsten Sinema and Mark Kelly of Arizona, Mark Warner and Tim Kaine of Virginia, Tom Carper and Chris Coons of Delaware, Maggie Hassan of New Hampshire, Jacky Rosen of Nevada, Gary Peters of Michigan and John Hickenlooper of Colorado.

"It is critical that, as the SEC moves through the rulemaking processes, there is adequate time to evaluate each individual rule as well as how those rules interact with existing and other proposed rules," the senators said, noting the "significant number of separate proposed rulemakings" on the SEC's agenda.

A spokesperson for Tester confirmed the authenticity of the letter and its signers. Tester, Warnock, Sinema and Warner are members of the Senate Banking Committee, which handles oversight of the SEC. The agency did not immediately response to a request for comment.

The Sept. 13 letter, which was not widely released but began circulating among lobbyists in recent days, underscores the growing tensions between Gensler and moderate Democrats on Capitol Hill at an especially contentious time for the regulator, as the agency's upcoming rules face a growing risk of litigation from industry as well as potential investigations from Republican lawmakers.

The letter hits on what has become a growing sore point for corporate America: the length of comment periods in which the agency lets the public send feedback on proposed regulations.

Under Gensler, the SEC has been proposing more and more rules with what critics see as unnecessarily tight public comment windows, such as 30 or 45 days.

Republicans like Sens. Bill Hagerty of Tennessee and Thom Tillis of North Carolina have previously criticized the SEC chief for the short comment periods. In April, nearly four dozen members of the House, including Democrats and Republicans, wrote to Gensler with concerns about whether the comment periods for certain rules aimed at the private fund industry "may hamper the ability for the public to provide effective and meaningful input." And SEC Commissioner Hester Peirce, the agency's most-senior Republican official, has said that 30 days “is typically not enough time to get feedback on a rule proposal.”

“The notice and comment process is intended to be a dialogue,” Peirce said in December. “Analyzing a multi-hundred page rule making in the context of intricate markets and an already complicated set of securities and other relevant laws is not an easy task.”

If the SEC did opt to give more time for public feedback, it would ultimately result in the proposed market safeguards taking longer to go into effect — possibly spelling good news for corporate executives hoping to wait out Gensler for a change in administration.

Gensler has pushed back on such concerns, saying that the law only requires the SEC to provide 30 days for comment. Even then, comment periods typically start when the proposal is published on the Federal Register, which is running on a lag of several weeks. In the meantime, comments can still be submitted to the SEC.

The SEC chair is not the first to face pushback for short comment periods. In the Trump administration, the Interfaith Center on Corporate Responsibility and the Council of Institutional Investors urged then-SEC Chair Jay Clayton for more time than 60 days to comment on a slate of rule changes related to firms that advise shareholders on corporate governance matters.

Gensler has come under fire for the pace of rulemaking coming out of the agency, with critics claiming that dissecting the flood of new proposals in such short periods of time is impractical. Gensler has pointed out that the number of proposals largely on par with what former SEC chairs like Clayton have done. The latest proposals have just been more clustered than in the past, Gensler said.