• President’s Two-for-One Deregulation Executive Order Does Not Apply to SEC
  • March 27, 2017
  • Law Firm: Greenberg Traurig LLP - New York Office
  • On Jan. 30, 2017, President Trump signed an executive order requiring, among other things, that unless prohibited by law, whenever an executive department or agency publicly proposes for notice and comment or otherwise promulgates a new regulation, it must identify at least two existing regulations to be repealed, and that any new incremental costs associated with new regulations be offset by the elimination of existing costs associated with at least two prior regulations.

    Although the President referenced the Dodd-Frank Wall Street Reform and Consumer Protection Act when announcing the order, the order does not apply to “independent agencies,” which include most financial regulatory agencies, such as the Securities and Exchange Commission, Commodities and Futures Trading Commission and Federal Reserve Board. Thus, the order does not cover many of the regulations enacted under Dodd-Frank. Additionally, the SEC cannot officially remove a rule without a formal rulemaking process, which entails a public comment period and economic analysis. Any such effort could be limited in the short-term since only two of the five SEC commission seats are currently filled, one by a Republican and one by a Democrat.

    Further, on Feb. 8, 2017, Public Citizen, the Natural Resources Defense Council and the Communications Workers of America sued the President and other officials in the U.S. District Court for the District of Columbia seeking to block the order, claiming that it “exceeds President Trump’s constitutional authority, violates his duty under the Take Care Clause of the Constitution, and directs federal agencies to engage in unlawful actions that will harm countless Americans.”

    Notwithstanding the inapplicability of the order to the SEC, as discussed elsewhere in this newsletter, the acting chair of the SEC has already laid the groundwork for reviewing Dodd-Frank rules regarding pay ratio and conflict mineral disclosure.