WASHINGTON A lawmaker on Friday pressed Securities and Exchange Commission Chair Mary Jo White for answers about why her agency continues granting regulatory waivers to companies that break the law, and urged the agency to stop the practice.
In a letter to White, Ohio Democratic Senator Sherrod Brown said he wants her to explain what steps, if any, she has taken to examine the SEC's policies for granting regulatory waivers and whether she plans to make changes.
"Removing privileges enjoyed by large firms will promote better behavior, increase accountability, and demonstrate to the financial markets that certain firms do not enjoy special treatment by virtue of their size," wrote Brown.
Brown is a member of the Senate Banking Committee and was the panel's lone lawmaker to vote against bringing White's confirmation to the Senate floor.
An SEC spokesman declined to comment immediately on Brown's letter.
Brown is at least the third federal lawmaker now to weigh in on a growing debate over the SEC's policy on granting certain waivers. The main waiver at issue involves "well-known seasoned issuer," or WKSI, waivers to companies.
A WKSI waiver is a coveted tag that lets companies raise money immediately through securities offerings without waiting for SEC approval.
Companies convicted of crimes or found liable for fraud can lose the status, but the SEC can agree to provide the company a waiver so they retain the WKSI tag.
In April, two SEC commissioners dissented over a waiver granted to the Royal Bank of Scotland Group Plc after one of its units struck a criminal plea deal over manipulation of the Libor benchmark interest rate.
One of those commissioners, Democrat Kara Stein, released a scathing statement that questioned the SEC's practice of routinely granting such waivers and questioning whether it is leading to a policy of "too big to bar."
That has since prompted other lawmakers to start speaking out, including Massachusetts Democratic Senator Elizabeth Warren and California Democratic Congresswoman Maxine Waters.
Earlier this week, Waters tried to include a provision in a broader piece of draft legislation that would prohibit the SEC from granting WKSI waivers to companies convicted of crimes or found liable for fraud in the past three years.
The Republican-controlled House Financial Services Committee, however, rejected her request to include her proposal in the bill.
White has not discussed her views much on the subject, just saying the agency applies the WKSI waiver policy "faithfully and vigorously."
Shortly before Stein publicly criticized the Royal Bank of Scotland waiver, the SEC also slightly toughened its policy on how waivers are doled out by requiring companies convicted of crimes to show "good cause" why they should retain their WKSI status.
Afterwards, one of her fellow commissioners, Republican Dan Gallagher, also issued a statement disagreeing with the change in policy.
(Reporting by Sarah N. Lynch)