ASA: Gensler SEC’s Lawfare Must Never Happen Again

WASHINGTON – The American Securities Association (ASA) today sent a letter to Acting Chairman Uyeda and Commissioner Peirce outlining nineteen (19) policy and process recommendations for immediate action that can begin to restore the public’s trust and confidence in the Securities and Exchange Commission (SEC).

“The Gensler SEC used lawfare to intimidate and cajole American businesses, and that must never happen again,” said ASA President and CEO Chris Iacovella. “That is patently unacceptable in a country that holds the rule of law, not rule by law, as sacrosanct and now is the time for this SEC to enact reforms that end the agency’s perpetual mission creep away from what Congress authorized.”

In the letter, ASA outlined detailed recommendations including:

·    Consolidated Audit Trail: End the collection of personally identifiable information (PII) by the CAT national registry; 

·    Off-Channel Communications: Make certain that every regulated entity who entered into an off-channel communication settlement prior to January 1, 2025, is treated the same as those regulated entities who entered into such agreements after January 1, 2025, with respect to the future obligations set forth in such agreements. Similarly situated regulated entities must be treated consistently and equally under the law; 

·    Elimination of Delegated Authority: Eliminate the practice of delegating policy making authority to career staff. This practice has led to a lack of accountability and transparency in the regulatory process and hidden much of the SEC’s regulatory and enforcement agenda from Congress and the general public; 

·    Minimum 90-Day Comment Period for Substantive Rulemaking: Unlike the Gensler SEC, this SEC should implement a mandatory minimum 90-day comment period for all substantive rulemakings. The current practice of shorter comment periods makes a mockery of due process because it does not provide sufficient time for stakeholders to thoroughly analyze proposed rules and provide comprehensive feedback; 

·    Reforming the Enforcement Process: The Gensler SEC ‘regulation by enforcement’ approach has led to overly aggressive enforcement actions and disproportionate fines that do not align with the severity of violations; 

·    Shareholder Proposals/Proxy Advisory Firms: This SEC must remove political, ideological, and cultural issues from our capital markets and sanction any organization that purports to make such issues a basis for interfering in the management of public companies; 

·    Trade Reporting: The Commission should immediately revoke the 1-minute trade reporting rule for fixed income securities because a policy decision cannot be delegated to and approved by an unconfirmed career staffer with no accountability to the public; 

·    SEC Budget Allocation: We recommend allocating a greater portion of the SEC's enforcement budget towards technology upgrades for critical systems like EDGAR. Improving the Commission's technological infrastructure would enhance market efficiency and reduce operational risks for regulators and market participants. 

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The American Securities Association (ASA) represents the retail and institutional capital markets interests of regional financial services firms who provide Main Street businesses with access to capital and advise hardworking Americans how to create and preserve wealth. ASA’s mission is to promote trust and confidence among investors, facilitate capital formation, and support efficient and competitively balanced capital markets. This mission advances financial independence, stimulates job creation, and increases prosperity. The ASA has a geographically diverse membership of almost one hundred members that spans the Heartland, Southwest, Southeast, Atlantic, and Pacific Northwest regions of the United States.