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Cummings Opposes Proposed SEC Rule to Allow Entities Other than the SEC to Grant Waivers

Nov 13, 2015
Press Release

Cummings Opposes Proposed SEC Rule to Allow Entities Other than the SEC to Grant Waivers

Washington, DC (Nov. 13, 2015 )—Today, Rep. Elijah E. Cummings, Ranking Member of the House Committee on Oversight and Government Reform, sent a letter to Securities and Exchange Commission (SEC) Chair Mary Jo White opposing a proposed rule that would allow the Commodity Futures Trading Commission (CFTC) and private self-regulatory organizations to grant waivers to banks disqualified from participating in the securities-based swaps market.

“My primary concern is that the proposed rule would allow entities other than the Commission—including private entities—to grant waiver requests,” Cummings wrote.  “If adopted, the rule would constitute the first time the Commission has granted executive authority to another entity without being required to do so by Congress.”

The Dodd-Frank Wall Street Reform and Consumer Protection Act imposed strict regulations on banks and other financial entities, including disqualifying individuals from participating in the securities-based swaps market if they have been convicted of felonies within the preceding ten years or convicted of intentionally violating securities and commodities laws. 

Under the law, entities and individuals who are disqualified may petition the SEC for a waiver to to participate in the market on behalf of affiliated entities.  However, the new proposed rule would allow the SEC to transfer this waiver power to the CFTC and private self-regulatory organizations.

Congress granted the CFTC authority to regulate the non-security-based derivatives market, but not authority to regulate the securities-based swaps market.  Congress also gave self-regulatory organizations the responsibility of adjudicating their own bylaws—with oversight from the SEC and the CFTC—but not the power to regulate the securities-based swaps market because they lack the impartiality necessary to make decisions in the best interest of the public.

Cummings noted that while the SEC should take the views of other entities into account when making waiver decisions, “Any waiver decision should be reviewed by the Commission and voted on by the Commissioners.”

Click here to see the letter to the SEC. 

114th Congress