Securities Regulation Daily SEC chairman issues reminder that SEC staff statements are nonbinding
Thursday, September 13, 2018

SEC chairman issues reminder that SEC staff statements are nonbinding

By John Filar Atwood

SEC Chairman Jay Clayton issued a reminder of the Commission’s long-held position that statements by SEC staff members are nonbinding, and impose no enforceable legal rights on the Commission. His remarks follow a similar statement issued last week by the Federal Reserve Board, Federal Deposit Insurance Corporation, Office of the Comptroller of the Currency, Consumer Financial Protection Bureau, and National Credit Union Administration.

The staff of the SEC frequently makes its views known through communications in which it addresses specific questions about Commission rules or regulations and how they may apply to a specific set of facts and circumstances. Clayton noted that the communications often include a disclaimer underscoring the distinction between the Commission’s rules and regulations, on the one hand, and staff views on the other. He recently instructed the directors of the Division of Enforcement and the Office of Compliance Inspections and Examinations to emphasize this distinction to their respective staffs.

Clayton said that the agency’s divisions and offices will continue to review whether prior staff statements and documents should be modified, rescinded or supplemented in light of market or other developments. One such rescission was issued simultaneously with Clayton’s statement, as the Division of Investment Management announced that it has withdrawn two prior no-action letters that provide guidance on proxy advisory firms (see related story in today’s Securities Regulation Daily).

Clayton emphasized that he does not want to hinder public engagement on staff statements and staff documents, which helps the Commission develop effective rules and regulations. However, he asked stakeholders to remember that it is only the Commission, not the staff, that adopts rules and regulations that have the force and effect of law.

House Financial Services Committee Chairman Jeb Hensarling (R-Tex) wasted no time in commending Clayton for his remarks. Hensarling said the clarification was welcome given that his committee "routinely hears that regulation through enforcement and staff guidance hinders innovation and confidence in accessing our capital markets."

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